Motion

In the context of Australian corporate governance and board management, a motion is a formal proposal put forward by a member of a meeting (typically a director on a board) for the group to consider, discuss, and ultimately vote upon. It is the primary mechanism by which a board of directors takes action or makes a decision.

A motion represents the "starting point" of a board decision. It is a specific call to action that transforms an idea or a necessity into a structured debate. Once a motion is successfully voted on and approved by the required majority, it transforms into a Resolution, becoming a binding decision of the company.

Understanding the mechanics of a motion is critical for directors, company secretaries, and chairpersons, as it ensures that business is conducted legally, efficiently, and in compliance with the Corporations Act 2001 (Cth) and the company's constitution.

The Lifecycle of a Motion

For a board meeting to be effective, motions must follow a structured lifecycle. This process ensures that all directors have the opportunity to understand the proposal and exercise their fiduciary duties properly.

1. Notice of Motion

In formal governance, a motion should ideally not be a surprise. Best practice dictates that significant motions are included in the Agenda and distributed as part of the Board Pack prior to the meeting. This allows directors to review relevant documents, financial reports, or strategic plans associated with the proposed motion.

The "Notice" Requirement: Under Australian law, directors must be given reasonable notice of the business to be conducted. While minor procedural motions can be raised from the floor, substantive motions (such as acquiring a business or removing a director) generally require advance notice to be valid.

2. Moving the Motion

During the Board Meeting, a director must formally "move" the motion. This is often done by stating, "I move that..." followed by the precise wording of the proposal. The person who proposes the motion is referred to as the "mover."

3. Seconding the Motion

Traditionally, parliamentary procedure requires a motion to be "seconded" by another director to demonstrate that the proposal has the support of at least two people and is worth the board's time.

Note on Australian Governance: While strict parliamentary procedure requires a seconder, many modern company constitutions and smaller proprietary companies do not strictly require a seconder for board meetings, unlike general meetings of shareholders. However, it remains a common convention to ensure consensus building.

4. Deliberation and Debate

Once moved (and seconded, if required), the Chair opens the floor for debate. This is the phase where the merits of the motion are discussed. Directors may ask questions, request clarification, or argue for or against the motion.

5. The Vote

After the debate concludes, the Chair "puts the motion" to a vote. Directors may vote in favour, against, or abstain. The method of voting—whether by a show of hands or a poll—is usually dictated by the company’s constitution or the Chair’s discretion.

6. The Outcome

If the necessary majority is achieved (usually a simple majority for ordinary business), the motion is carried and becomes a Resolution. If it fails, the status quo remains.

Motion vs. Resolution: What is the Difference?

The terms "motion" and "resolution" are often used interchangeably in casual conversation, but in corporate governance, they represent two distinct stages of the decision-making process.

Feature	Motion	Resolution
Status	A proposal or suggestion.	A decision or act of the board.
Timing	Exists before and during the vote.	Exists after the vote is successfully passed.
Binding Nature	Not binding; it is merely a topic for debate.	Legally binding on the organization.
Minutes Entry	Recorded as "It was moved by..."	Recorded as "It was resolved that..."

Think of the motion as the question and the resolution as the answer. A motion that is voted down dies and does not become a resolution.

Types of Motions in Board Meetings

Not all motions are created equal. In Australian boardrooms, motions generally fall into three categories:

1. Substantive Motions

These are the most common and important motions. A substantive motion is a self-contained proposal that allows the board to express an opinion or take specific action.

Examples: Approving the annual budget, appointing a new CEO, authorizing the signing of a contract, or declaring a dividend.

2. Procedural Motions

These motions relate to the conduct of the meeting itself rather than the business at hand. They are used to manage the flow of the meeting.

Examples: A motion to adjourn the meeting, a motion to suspend standing orders, or a motion to move to a vote immediately (often called "putting the question").

3. Amending Motions

During the debate phase, a director may agree with the general idea of a substantive motion but disagree with the specific wording. They can move an "amendment" to the original motion.

If the amendment is seconded and passed, the original motion is modified.
The board then debates and votes on the amended motion.
This is a critical tool for refining decisions to ensure they are accurate and feasible.

Drafting an Effective Motion

The clarity of a motion is paramount. A vaguely worded motion can lead to an ambiguous resolution, which may be unenforceable or lead to legal disputes later. When using board management software like BoardCloud, the wording of motions often forms the basis of the final Minutes.

Principles for drafting motions:

Be Affirmative: Motions should propose to do something rather than not do something. Negative motions can be confusing during the voting process (e.g., voting "no" to a motion "not to accept" a report).
Be Precise: Avoid ambiguity. Instead of "The board discusses the marketing budget," the motion should read, "The board approves an increase of 10% to the Q3 marketing budget."
Be Complete: The motion should include all necessary details, such as dates, amounts, and responsible parties.

Example of a poor motion:

"That we look into buying a new software."

Example of a strong motion:

"That the Board authorizes the CFO to purchase a 12-month license for BoardCloud board management software at a cost not exceeding $10,000, effective 1 July."

The Role of the Chair in Managing Motions

The Chair plays a pivotal role in handling motions. Their responsibility is to ensure the rules of debate are followed and that the will of the meeting is clearly determined.

The Chair’s duties regarding motions include:

Clarification: Ensuring the motion is clearly understood by all directors before debate begins.
Facilitation: Ensuring that debate remains relevant to the motion at hand and that no single director dominates the discussion.
Impartiality: While the Chair has a vote, they must ensure that both sides of a contentious motion are heard.
Putting the Question: clearly stating, "The motion before the board is [reads motion]. All those in favour?"
Declaration: Clearly announcing the result: "The motion is carried" or "The motion is lost."

In the event of a tied vote, the company’s constitution may give the Chair a "casting vote" to break the deadlock. If the Chair does not have a casting vote (or chooses not to use it), a tied motion typically fails.

Motions in the Digital Age: Circular Resolutions

With the rise of board management software like BoardCloud, the physical necessity of moving a motion in a boardroom has evolved.

Under the Corporations Act 2001, companies are permitted to pass resolutions without a physical meeting if all directors entitled to vote sign a document stating they are in favour of the resolution. This is known as a Circular Resolution or "Flying Minute."

BoardCloud facilitates this by allowing motions to be distributed digitally. Directors can vote "Yes," "No," or "Abstain" via the platform. This creates an immediate, audit-ready digital trail. In this context, the "Motion" is the digital proposal sent to the directors' devices.

This digital approach is vital for time-sensitive motions that cannot wait for the next scheduled Board Meeting.

Recording Motions in the Minutes

The recording of motions is the primary function of the meeting Minutes. For legal protection, the minutes must accurately reflect what was decided.

There are two schools of thought regarding how much detail to include:

Resolutions Only: Recording only the final decision (e.g., "Resolved that the budget be approved"). This is often preferred to protect legal privilege and keep minutes concise.
Narrative Style: Recording the motion, the key points of the debate, and the outcome.

Regardless of the style, the minutes must clearly state whether a motion was Carried (passed) or Lost (failed). If a director specifically requests their dissent be noted (i.e., that they voted against the motion), this must be recorded. This is crucial for limiting the liability of individual directors regarding decisions they disagreed with.

Common Pitfalls and Issues

1. The "Any Other Business" Trap

It is common for boards to have an agenda item listed as "General Business" or "Other Business." Directors should be cautious about moving significant substantive motions during this section. Without prior notice, other directors may feel blindsided, and the resulting resolution could be challenged on the grounds that directors were not given adequate opportunity to consider the matter (Procedural Fairness).

2. Conflict of Interest

If a motion concerns a matter in which a director has a material personal interest (e.g., a motion to award a contract to a company owned by that director), they must generally declare the conflict and recuse themselves from the room during the debate and the vote. They cannot move, second, or vote on that motion.

3. Lack of Quorum

A motion cannot be validly moved or voted upon if the meeting does not have a Quorum. If directors leave the room (or the video call) and the number drops below the minimum required by the constitution, no further motions can be passed until a quorum is re-established.

Summary

A motion is the fundamental unit of board authority. It transforms individual opinions into collective corporate will. Whether managed through traditional verbal procedures in a boardroom or via digital voting tools like BoardCloud, mastering the motion is essential for effective Australian corporate governance.

Frequently Asked Questions (FAQ)

Q: Can a motion be withdrawn after it has been moved?

A: Generally, yes. Once a motion belongs to the meeting (i.e., it has been moved and seconded), it can usually only be withdrawn with the consent of the meeting (or "leave of the meeting"). If any director objects to the withdrawal, the motion must typically proceed to a vote.

Q: Does every motion require a seconder in a board meeting?

A: Not always. In formal meetings of shareholders (AGMs), a seconder is almost always required. However, for board meetings, the requirement depends on the company's constitution. Many small boards operate informally without seconders, but strictly following the procedure of moving and seconding helps establish clear consensus.

Q: What happens if a vote on a motion is tied?

A: If the votes for and against a motion are equal, the motion is not carried (it fails). However, the Chairperson is often granted a "casting vote" (a second vote) by the company’s constitution to break the tie. If the constitution does not provide for this, the status quo prevails.

Q: Can a director vote on a motion by proxy?

A: In Australia, directors generally cannot appoint a proxy to vote for them at a board meeting unless the company’s constitution specifically allows for it. The law views the duties of a director as personal, meaning they must exercise their own judgment. (Note: This is different from shareholder meetings, where proxies are standard).