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Navigating shareholder meetings: private limited company obligations
Private limited companies must take heed of their legal obligations under the Companies Act 2006 (the Act) and under their constitution (their Articles of Association). Central to these obligations are shareholder meetings; general meetings and annual general meetings (AGMs).
Is my company required to convene a general meeting?
General meetings are meetings where business which is not general conducted at an AGM is proposed to shareholders, e.g., changing the company’s Articles of Association or creating different classes of shares. In practice however most private limited companies deal with obtaining shareholder approval via the written resolution procedure rather than through holding a general meeting – although meetings may still suit companies with a larger number of shareholders.
Any shareholder meeting which is not an AGM would be known as a “general meeting”. An AGM is annual i.e., once a year (as the name would suggest) and serves as a forum for shareholders to receive information like the annual accounts. However, private companies do not have to hold an AGM unless their Articles of Association explicitly require them to.
Procedure
The protocol for convening shareholder meetings is outlined in the company's Articles of Association. It dictates who has the authority to call a meeting, the process for issuing notices, and the required scheduling time frame. Strict compliance with these procedural guidelines will ensure the meeting's legality and alignment with statutory requirements.
Quorum
A crucial aspect of any shareholder meeting is establishing a quorum, representing the minimum number of shareholders required for the meeting to be able to proceed. Quorum requirements are typically specified in the company's Articles of Association and may involve a particular percentage of total shareholders or a fixed number. Failing to meet the quorum threshold can invalidate decisions.
Notice of meetings
Notices are required for shareholder meetings. The Articles of Association typically define a notice period, giving shareholders ample time to prepare for and attend the meeting. Notices must include essential details such as the meeting's agenda, date, time and venue, and include copies of relevant documents. Timely and transparent notifications not only satisfy legal requirements but also encourage active shareholder engagement.
Resolutions and decision making and meeting minutes
The Act distinguishes between ordinary resolutions, requiring a simple majority (usually 50% or more) of votes cast, and special resolutions, which demand a higher majority (usually 75% or more). Companies are obliged to maintain accurate minutes of shareholder meetings, documenting attendees, resolutions passed, and voting results as part of their records.
For precise and tailored guidance on general meetings, your company’s obligations to shareholders, or generally in relation to any other corporate matter, please call Sarah Ward, a Partner in our Corporate Team, on 01384 340 596 or e-mail Sarah at sward@georgegreen.co.uk for advice and assistance.