Annual General Meeting / EGM / Written Resolution


GUIDELINE FOR GENERAL MEETING

 

WHO MAY ATTEND?

 

Only members (either in person or represented by a proxy or corporate representative) and auditors are entitled to attend a general meeting of a company as of right. Directors and other officers of the company who are not also shareholders are usually allowed to attend by the articles of association. Other persons may attend at the discretion of the chairman.

 

Appointment: Although a company may appoint a proxy, proxies are subject to more restrictions than members attending in person and it is often preferable for a corporate representative to be appointed. A corporate representative is entitled to exercise the same powers on behalf of the appointor as the appointing corporation could exercise if it were an individual shareholder.

 

Corporate Shareholders: A corporate representative must be appointed by a resolution of the directors (or other governing body) of the appointor.

 

Proxies: Any member entitled to attend and vote at a meeting may appoint a proxy, who need not also be a member.

 

Board committees: The chairmen of the audit, remuneration and nomination committees to be available to answer questions at the AGM. 

 

Auditors: A company's auditors (and former auditors) are entitled to attend any general meeting of the company and to be heard on any part of the business of the meeting which concerns them as auditors.

 

Advisors to the company: The company's solicitors, accountants etc. may be available to advise or comment on technicalities if invited by the chairman. Where opposition is expected to resolutions, it is sensible for the company's solicitors to be present to advise on any points of procedure that may arise since those opposed may try to create, or subsequently rely on, an irregularity to render the proceedings invalid.

 

Observers: The articles of some companies allow, or the chairman in one's discretion may permit, persons who are not members of the company (e.g. a member's professional advisor) to observe the meeting either directly or in a separate room via an audio-visual link.

 

Press and analysts: Attendance of anyone not entitled to be at the meeting as of right is at the discretion of the chairman and members should be given priority if large numbers attending restrict space.

 

COMPANY SECRETARY

 

Responsibility: The company secretary is responsible to the chairman for the proper administration of meetings of the company. These tasks include compiling a list of the proxies received and checking them against the members present, ensuring a quorum is present, ensuring those who speak have the right to do so and assisting with the voting process (particularly if a poll is demanded). Other practical matters the company secretary should consider in preparation for the AGM are:

  • preparing a script for the chairman, which should cover procedural matters (guiding the meeting through the resolutions to be put to it), alternative provisions covering matters which may arise at the meeting (for example, a demand for a poll or a proposed amendment to a resolution) and the declaration of the result of each vote;
  • briefing notes summarising answers on a wide range of questions shareholders may ask.

 

DOCUMENTS AVAILABLE AT THE MEETING

 

A checklist of the documents will be prepared by the company secretary for presentation at the AGM. In particular, copies of all directors' service contracts must be made available for inspection by any person at the AGM.

 

CHAIRMAN OF THE AGM

 

Appointment:  Typically, the company's articles will provide for the chairman of the board (or another director if one is absent) to act as chairman of the meeting as long as one is present at a meeting.

 

Chairman's role: The chairman acts as the representative of the members, not the board, in conducting the meeting. In fulfilling one's duties, the chairman must act impartially, having due regard to the wishes of the majority and ensuring that the minority is fairly treated. In the exercise of discretion, one must act in the best interests of the company; as chairman of the meeting, one owes a duty to the meeting not to the directors. One must not allow himself to be influenced either by the board or by one's own interests in fulfilling that duty. The conduct of a meeting is a matter largely in the hands of the chairman with the assent of the persons properly present.

 

Duties: The chairman's duties include:

  • to preserve order in the conduct of those present;
  • to ensure proceedings are properly conducted in accordance with the Company Law and the articles and otherwise in accordance with the wishes of the meeting;
  • to ensure that all opinions are fairly aired, as far as practicable;
  • to ascertain the views of the meeting on the questions under consideration;
  • to ensure that the business of the meeting is got through in an efficient manner;
  • to act impartially;
  • to confine the discussion to matters within the scope of the meeting and reasonable limits of time; and
  • to decide whether proposed motions and amendments are in order and to accept all legitimate resolutions and amendments.

Powers: The chairman's powers include the power:

  • to regulate the course of proceedings;
  • to receive or reject proxies;
  • to decide points of order and other incidental matters which require immediate resolution:
  • to close the discussion and move to a vote with the consent of the meeting;
  • to ascertain the decisions of the meeting by putting relevant motions to the meeting and taking a vote on a show of hands (and giving a casting vote, if the articles so provide, where applicable), declaring results of a show of hands and causing a poll to be taken if properly demanded; and
  • to adjourn the meeting where necessary and justified.

The company's articles may give the chairman additional powers, e.g. conclusively to declare the result of a show of hands, to demand a poll or insist a poll is taken after a valid demand has been withdrawn, and a casting vote. Other articles may go further and give the chairman the power to adjourn without the consent of the meeting or rule conclusively on the validity of proposed amendments. In every case the articles should be checked. 

 

PROCEDURE AT THE MEETING

 

Opening the meeting

Start time: As a rule, subject to the chairman's duty to act impartially and to allow the meeting to proceed in an orderly manner, if a quorum is present, the chairman should attempt to start the meeting on time. In practice, he may want to wait until all those in the queue at the appointed start time have been admitted or, alternatively, open the meeting and delay any formal business until all the members have been admitted. The mood of those members present will normally determine the length of delay the chairman can sensibly allow before starting the business of the meeting.

New information emerging since notice dispatched: If new information has emerged since the notice of meeting was dispatched, the chairman should draw it to the meeting's attention.

 

Quorum

The quorum for a meeting is the number of members who must be present at the meeting for its proceedings to be valid. Only persons entitled to vote count toward a quorum. A corporation present by a representative is to be treated as being present in person and so counts toward the quorum

Quorum ceasing to be present: Where, during the course of the meeting, the number of members present falls below that required for a quorum, the meeting is inquorate and should be adjourned, since it can no longer validly conduct business (unless the articles provide otherwise

 

Who may speak?

Unless otherwise provided by the articles, the following have the right to speak at a meeting:

  • members;
  • directors;
  • corporate representatives;
  • a proxy at a meeting of a private company;  and
  • auditors in respect of business concerning them as auditors (former auditors have limited rights to attend and speak in respect of business concerning them as former auditors)

Neither analysts nor members of the press have the right to raise questions or to speak at meetings; they are present (if at all) as observers only. A proxy does not have the right to speak at a meeting of a public company except to demand or join in demanding a poll.

 

Types of resolution - ordinary and special business

If a distinction is drawn, the articles will define what constitutes `ordinary business'. This usually comprises:

  • declaration of dividends;
  • consideration of accounts and balance sheets;
  • consideration of auditors' and directors' reports and other documents annexed to the reports;
  • appointment, re-appointment and remuneration of directors; and
  • appointment and remuneration of auditors.

Proposing and seconding resolutions

The chairman usually proposes the resolutions to be put to the AGM. Before each resolution is put to the vote, it is recommended best practice for the chairman to explain again its effect and purpose (elaborating, if necessary, on the information provided in the notice) and invite shareholders to ask relevant questions.

 

Requisitioned resolutions

Shareholders holding at least 5% of the voting rights of the company or numbering 100 can require the company to give notice of a proposed resolution to shareholders. The requisitionists must bear the cost of issuing the notices in relation to the resolution. If notice has been given by a member of a resolution, the chairman should call upon the giver of the notice to put the resolution.

 

Proposing amendments to resolutions

An amendment to a special or extraordinary resolution cannot be proposed at the meeting itself, except to correct grammatical or clerical errors. In relation to ordinary resolutions, the position is more flexible, but even in this case, unless the articles provide otherwise, the chairman should only allow a substantive amendment to be considered by the meeting if:

  • it is genuinely relevant to the resolution under consideration;
  • it is within the scope of the notice of the meeting;
  • it does not negate the substantive resolution;
  • it does not impose a more onerous burden on the company or its members; and
  • it is not redundant (e.g. seeking to re-open business already decided by the meeting), inconsistent (incompatible with other decisions of the meeting or with the company's articles), obstructive, vexatious (intended only to impede the transaction of business), dilatory or irrelevant.

Directions to the board

Articles of Association usually provide for the business of the company to be managed by the directors subject to directions given by special resolution. If articles follow this the standard form, the members cannot give directions to the board in the course of a meeting unless 21 days' notice of the proposed resolution has been given. 

 

Closing the meeting

The chairman should formally declare the meeting closed. If he fails to do so, it may be possible for a member to allege that all the business of the meeting was not properly completed.

 

Minutes of meetings

Minutes of all proceedings at general meetings must be entered in books kept for that purpose. The books must be kept at the company's registered office and must be open to inspection by members free of charge during business hours for at least two hours each day. However it is worth noting that minutes of general meetings normally record only the outcome and not the discussions themselves.

 

ADJOURNMENT OF MEETING

 

Postponement or cancellation before the meeting is opened

Once a general meeting has been convened upon due notice, subject to the articles, it cannot be postponed or cancelled. The correct procedure, where the purpose for which the meeting has been convened has ceased to exist, is to hold the meeting as convened and adjourn it without putting any resolutions to the members. 

 

VOTING

 

Who may vote?

Right to vote: Each member has the prima facie right to vote at a meeting. Votes must be exercised in person or by proxy at the meeting and cannot be validly lodged by post or electronically.

Corporate representative: A corporate representative is entitled to exercise the same powers on behalf of the appointor as that corporation could exercise if it were an individual shareholder

Articles of association usually specify who is entitled to vote at meetings and whether members have either weighted or restricted voting rights. If they contain no provision, every member has, in the case of a company originally having a share capital, one vote in respect of each share

 

Methods of voting

The chairman's duty to elicit the true sense of a meeting is carried out by formally putting business to a vote. The normal practice in company meetings is for a vote to be taken first on a show of hands and then, if a valid demand is made, on a poll. In the absence of an article allowing it, postal voting is not permissible.

 

Show of hands

This is the basic common law method of taking a vote and will apply in the first instance unless the articles exclude it. It has the advantage of being quick and simple and is a satisfactory way of determining a resolution where the matter is uncontroversial. 

 

Demanding a poll

The right to demand a poll is a common law right and, although the articles usually specify the conditions subject to which a poll may be requested. A company's articles may not exclude the right to demand a poll at a general meeting on any question other than the election of the chairman or the adjournment of the meeting. That section also invalidates articles which would have the effect of making ineffective demands for a poll:

  • by not less than five members having the right to vote at the meeting;
  • by a member or members representing not less than one-tenth of the total voting rights of all the members having the right to vote at the meeting; or
  • by a member or members holding shares conferring a right to vote at the meeting, being shares on which an aggregate sum has been paid up equal to not less than one-tenth of the total sum paid-up on all the shares conferring that right.

Voting by Proxy

Although there is no common law right to vote by proxy. Company law and articles allow any member of a company entitled to attend and vote at a meeting to appoint another person (whether or not a member) to attend and vote in one's place. A proxy must act within the limits of the authority given by the member

 

 

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Guideline for Annual General Meeting of Shareholders
Roles, Responsibilities and Procedures
Minutes of General Meeting
Annual General Meeting - AGM
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