The concept of holding general meeting is to keep a check on the management. Illustrate and explain.
EXECUTIVE SUMMARY
After a long ‘bull market, many Bangladeshi shareholders have recently experienced their first sustained losses or negative growth. At the same time, market pressure has resulted in some corporate collapses, revealing flawed business strategies and dubious or dishonest corporate behavior. Shareholders, the wider community and our politicians have questioned the quality of Bangladeshi’s corporate governance and demanded reform to rebuild trust in the corporate sector. Improving communication is a vital initial step towards rebuilding that trust and reinforcing the quality of our corporate and market systems and practices. Improved communication between companies and their shareholders, particularly their retail shareholders, is essential if the wider community is to be convinced that the vast majority of company Directors and executives are highly-skilled and competent individuals focused on growing the wealth of shareholders. This Paper aims to be a catalyst for companies to examine the importance of AGM for shareholders and the ultimate control and destiny of a company is vested in the hands of its shareholders.
1.0: INTRODUCTION
Meeting:
The meeting is an assembly of persons whose consent is required for anything to decide, expressing their consent by a proper majority of votes, whether or not that thing should be done. The expression in its individual sense means a conglomeration of the meetings held in a particular sessions and sometimes is equated with the session. It is wide enough to embrace not only one sitting but all the sittings within a particular session.
Annual General Meeting:
It is an annual meeting of body of members. Every company is required to call at least one meeting of its shareholders each year. This meeting is known as annual general meeting. Every company whether public or private, having share capital or not, limited or unlimited must hold this meeting. The first annual general meeting of a company must be held within eighteen months from the date of its incorporation, and then no meeting will be necessary for the year of incorporation and the following year. Like for example, if a company is incorporated in January 1960, its first annual general meeting should be held within eighteen months, i.e., up to June 1961 and then no meeting will be necessary either for 1960 or 1961. Therefore, one annual general meeting must be held every year. The gap of one meeting and the next should not be more than fifteen months. The Act provides no provision for the deferment of the first AGM.
An annual general meeting (commonly abbreviated as AGM, also known as the annual meeting) is a meeting that official bodies, and associations involving the public (including companies with shareholders), are often required by law (or the constitution, charter, by-laws etc. governing the body) to hold. An AGM is held every year to elect the Board of Directors and inform their members of previous and future activities. It is an opportunity for the shareholders and partners to receive copies of the company’s accounts as well as reviewing fiscal information for the past year and asking any questions regarding the directions the business will take in the future.
Objective of the report & meeting:[1]
The object of the statutory meeting and forwarding statutory report to the member is to put the members of the company in the possession of all important facts relating to the company, what shares have been taken up, what money received, what contracts entered into and what sums spent on the preliminary expenses etc. and to provide the members an opportunity of the meeting and discussing the management, methods and prospects of the company also to approve the modification of the terms of contract named in the prospectus. A private company and a company limited by guarantee and not having a share capital need not hold a statutory meeting.
1.1 Kind of Meetings:[2]
There are various kinds of meetings. They are:
a) Shareholders meeting: Means where shareholders gather together for yearly update & to select board of directors for the next financial year.
b) Statutory meetings: Means shareholders‘ meeting (such as an AGM) that an incorporated or registered firm must have within the specified period under corporate legislation.
c) Annual general meeting: An annual general meeting or extra ordinary general meeting where in the board of directors, auditors etc are appointed, accounts and reports on the performance are announced are known as share holders meeting. This is the only occasion a share holder can interact and influence the management of a corporation
1.2 Timing:
Again, each organization should find guidance in its Constitution regarding when an AGM should take place. It does need to take place following the end of your financial year when accounts have been audited.
1.3 Notice of annual general meeting:[3]
A notice of at least 21 days
Before the meeting must be given to members unless consent is accorded to a shorter notice by members, holding not less than 95 Per cent of voting rights in the company. The notice must state that the meeting is an AGM. The time, date and place of the meeting must be mentioned in the notice. The notice of the meeting must be accompanied by a copy of the annual accounts of the company, director’s report on the position of the company for the year and auditor’s report on the accounts. Companies having share capital must also state in the notice that a member is entitled to attend and vote at the meeting and is also entitled to appoint proxies in his absence. A proxy need not be a member of that company. A proxy form must be enclosed with the notice. The proxy forms are required to be submitted to the company at least 48 hours before the meeting.
1.4 Committee/Board Nominations:
Your Constitution should also give guidance on electing committee or board members. It is advisable to ask for nominations before the AGM, which should be proposed and seconded. Check whether your constitution has rules about who is allowed to stand as a committee or board member.
1.5 Publicity and Invitations:
It is usual for organizations to be required to give advance notice of the AGM. Your Constitution may state that this notice needs to be made public, e.g. through the local newspaper, and by writing to members 21 days prior to the event. A copy of the agenda (see below) should be sent along with the invitation. Committee and Board members should attend, and normally staff and other volunteers are encouraged to attend. Invitations may also go out to clients and local decision-makers as appropriate.
1.6 Agenda of AGM:[4]
The AGM is normally conducted by the Chair of the organization. Minutes of the meeting should be taken by the Secretary. A typical AGM agenda will cover the following items:
· Opening remarks/Welcome
· Apologies
· Minutes of previous AGM
· Matters arising from the Minutes
· Presentation of Annual Report (Chair/Secretary)
· Adoption of Annual Report
· Presentation of Accounts (Treasurer)
· Adoption of Accounts
· Appointment of Auditors/Independent Examiner
· Election of Management Committee/Office Bearers
· Motions to be put to the AGM
· Any Other Competent Business
· Closing remarks
1.7 Appointment of Auditors:
If an organization is happy with the performance of its auditors it is usual to move for adoption of the existing auditors. If for some reason there is to be a change of auditor, this can be arranged by the committee during the coming year.
1.8 Election of Management Committee/Office Bearers:
The constitution will provide guidance on the election of committee or Board members, including the length of time they should serve. Each individual wishing to stand needs to have a proposer and a seconder.
1.9 Voting Procedure:
Check your constitution to find out who is eligible to vote at the AGM. If the constitution does not provide clear guidance on what to do in the event of a tie, then it is usual practice for the Chair of the organization to have a casting vote. The existing committee needs to be clear about voting procedures as lay out by the constitution before attending the AGM.
2.0 Motions to be put to the AGM:
A Motion to be put to an AGM should usually be received by the organization an agreed time before the AGM, so that it might be included with the papers sent out to those attending. Some organizations do not allow motions to be put at the AGM on the spur of the moment. Motions may take a number of forms. There may be a motion to petition the Scottish Parliament, or the local authority; in support of the actions of another organization; to change the direction or the organization or increase/limit the extent of its work.
3. IMPORTANCE OF GENERAL MEETING IN THE CONDUCT OF COMPANY
3.1 Importance of annual general meeting:
It is only the AGM of the company that the shareholders may exercise any control over the affairs of the company. They may confront their directors, their elected representatives at least once a year. They also get an opportunity to discuss the affairs and review of the working of the company. They may also take necessary steps for the protection of their interest. They may for instance refuse to re-elect a director whose action and policy they disapprove. They may also take up any other business relating to the affairs of the company for discussion. Annual accounts are also presented for consideration of the shareholders and dividends are declared at the AGM.
3.2 Extraordinary general meeting:[5]
A statutory meeting and an AGM of a company are called ordinary meeting. Any meeting other than these meeting is called an extraordinary meeting. It is called for transacting some urgent or special business, which cannot be postponed till the next AGM. It may be convened by (1) the board of directors on its own or on the requisition of the member; or (2) the requisitionists themselves on the failure of the board of directors to call for the meeting.
3.3 Extraordinary general meeting convened by the board of directors:
The board of directors may call an extraordinary meeting on it’s own. The board of directors may call an extraordinary general meeting (EGM) whenever some special business is to be transacted, which in the opinion of the board of director, which may not be postponed till the next AGM. Some of the examples of the
3.4 Extraordinary general meeting convened by the requisitionists:
Every shareholder of company has a right to requisition an EGM. He is not bound to disclose the reason for the resolution to be proposed at the meeting.
3.5 Power of company law board to order calling of extraordinary general meeting:
If for any reason, it is impracticable to call a meeting of a company, other than an AGM, or to hold or conduct the meeting of the company, the CLB may, either on its own motion, or on the application of any director of the company, or of any member of the company, who would be entitled to vote at the meeting, order a meeting to be called and conducted as the CLB thinks fit, and may also give such other ancillary and consequential directions as it thinks fit expedient. A meeting so called and conducted will be deemed to be a meeting of the company duly called and conducted.
3.6 Quorum for meeting:
Quorum refers to the minimum number of members who must be present at a meeting in order to constitute a valid meeting. A meeting without the minimum quorum is invalid and decisions taken at such a meeting are not binding. The articles of a company may provide for a quorum without which a meeting will be construed to be invalid. Unless the articles of a company provide for larger quorum, 5 members personally present (not by proxy) in the case of a public company and 2 members personally present (not by proxy) in the case of a private company will be the quorum for a general meeting of a company. It has been held by courts that unless the articles otherwise provide, a quorum need to be present only when the meeting commenced, and it was immaterial that there was no quorum at the time when the vote was taken.
3.7 Requisites of valid meeting:
The following conditions must be satisfied for a meeting to be called a valid meeting. It must be properly convened. The persons calling the meeting must be authorized to do so proper and adequate notice must have been given to all those entitled to attend the meeting must be legally constituted. There must be a chairperson. The rules of quorum must be maintained and the provisions of the Companies Act, 1956 and the articles must be complied with; and the business at the meeting must be validly transacted. The meeting must be conducted in accordance with the regulations governing the meetings.
3.8 Minutes of proceeding of meeting:
Every company must keep minutes containing details of all proceedings at the general meetings. The pages of the minute books must be consecutively numbered and the minutes must be recorded therein within 30 days of the meeting. They have to be written directly on the numbered pages. Pasting or attaching of papers is not allowed. Each page of every such minutes books must be initialed or signed and last page of the record of proceedings of each meeting in such books must be dated and signed by in the case of the meeting of the board of directors or committee thereof, by the chairman of that meeting or that of the succeeding meeting and in the case of a general meeting, by the chairman of the same meeting within the aforesaid 30 days or in the event of the death or inability of that chairman within the period, by a director duly authorized by the board of directors for the purpose. The CLB, however, may not object if minutes are maintained in loose-leaf form provided all other procedural requirements are complied with and all possible safeguards against manipulation or interpolation of the minutes are ensured. The loose leaves must be bound at reasonable intervals. Entering the minutes in a bound minute book by a chemical process, which does not amount to attachment to any book by pasting or otherwise is permissible provided on the mechanical impression of the minutes, the original signatures of the chairman are given on each page. All appointments of officers made at any of the meetings must be included in the minutes of the meeting. In the case of a meeting of the board of directors or its committee, the minutes must also state the names of directors present at the meeting and the names of directors, if any, dissenting from, or not concurring with a resolution passed at the meeting. Where minutes of the proceedings of any meeting have been kept properly, they are, unless the contrary is proved, presumed to be correct, and are valid evidence that the meeting was duly called and held, and all proceedings thereat have actually taken place, and in particular, all appointments of directors or liquidators made at the meeting will be deemed to be valid. The minute books of the proceedings of general meetings must be kept the registered office of the company. Any member has a right to inspect, free of cost during business hours at the registered office of the company, the minutes books containing the proceedings of the general meetings of the company.
CONCLUSION
A company is an artificial person in the eye of law but individual natural person takes up its entire works. The directors of the company may easily get the benefit of working for the management of the company. The concept of holding general meeting is to keep a check on the management, which must not work detriment to the interest of the shareholders as well as the members of the company. A general meeting discloses all the important aspects and maintains a clear balance between the directors, shareholders and members of the company. The importance of the meeting cannot be overlooked in case of companies. It regulates the conduct of the company so as to benefit the entire individual involved to form a company.
Bibliography
- www.lawyersnjurists.com
- Business Law: Denis Keenan and Sarah Riches
- www.wikipedia.com/kind of meeting for shareholders
- www.google.com/agenda of AGM/Business Law: Denis Keenan and Sarah Riches.
- www.scribd.com/doc/5774311/IMPORTANCE-OF-GENERAL-MEETING-IN-THE#fullscreen:on
[1] www.scribd.com/doc/5774311/IMPORTANCE-OF-GENERAL-MEETING-IN-THE#fullscreen:on
[2] www.wikipedia.com/kind of meeting for shareholders
[3] www.scribd.com/doc/5774311/IMPORTANCE-OF-GENERAL-MEETING-IN-THE#fullscreen:on
[4] www.google.com/agenda of AGM/Business Law: Denis Keenan and Sarah Riches
[5] The Companies Act, 1956, s. 169