Types of shareholder meetings
Members, commonly known as shareholders, of a company meet through what are called general meetings. During such meetings the directors report to the shareholders and resolutions are passed by the shareholders.
The common types of members’ meetings are the annual general meeting (“AGM”) which is required by section 167 of the Companies and Other Entities Act (Chapter 24:31), (“the Act”) or occasionally an extraordinary general meeting (“EGM”) which is provided for in section 168 of the Act. The Act should be read together with the company’s Articles of Associations (“the Articles”). Regulated entities may have additional requirements.
AGM
Briefly, an AGM in terms of section 167, may deal with and dispose of electing directors, directors’ remuneration, report on directors’ responsibilities and activities, report by the audit committee, corporate governance report, appointment of external auditors for the following year, distributions, borrowings, any other issues deemed necessary.
Common arguments
Arguments over the validity of resolutions passed at AGMs are common, due to many factors such as length or manner of notice for calling such meetings, quorum, voting rights. This article focusses on the length of notice for calling general meetings, based on the Act which should be read together with a company’s Articles.
Key provisions in the Act
In terms of Section 169(1) a company’s AGM may be called by 21 days’ notice in writing. A meeting which is not an AGM, implying an EGM, or a meeting for the passing of a special resolution may be called by 14 days’ notice in writing or in the case of a private company, by 7 days’ written notice. Any provisions of a company’s Articles shall be void if it provides for the calling of a meeting of the company, other than an adjourned one, by notice shorter than specified herein.
Section 169(2) provides that a company shall, regardless of a meeting being called by shorter notice than specified in 169(1) or in a company’s Articles, be deemed to have been duly called if it is agreed:
(a) In the case of an AGM, by all the members entitled to attend and vote at the meeting.
(b) In the case of any other meeting, by a majority in number of the members having a right to attend and vote at the meeting, holding not less than 95% in nominal value of the shares, giving a right to attend and vote at the meeting.
Section 169(3) allows, by agreement, giving notice through email.
Special resolutions
Section 175 of the Act defines a resolution as a special resolution when it has been passed by a majority of not less than 75% of such members entitled to vote as are represented in person by proxy at the AGM of which not less than 21 days’ notice was given. The notice should specify the intention to propose the resolution and its terms. Members holding at least 25% total votes should be present in person or by proxy.
However, if the majority of members in number holding at least 95% in nominal value giving the right to vote are present at the meeting, and approve, a resolution may be proposed and passed as a special resolution at the meeting even if less than 21 days’ notice period was given. All other resolutions shall be ordinary. Regard, however, should be given to a company’s Articles.
Section 177 should be complied with in case of resolutions which require special notice.
This simplified article is for general information purposes only.
Godknows Hofisi is a legal practitioner, chartered accountant, corporate rescue practitioner, and consultant in deal structuring, business valuations and tax. He writes in his personal capacity. He can be contacted on +263 772 246 900 or gohofisi@gmail.com
