Company meetings and resolutions:
Today, we discuss the different meetings held by a private company and the different resolutions to be extracted at those meetings.
One of the best practices for your company is to constantly have meetings; whether to make business plans or strategies, or to discuss the progress of certain action points. It is good practice to make decisions together and constantly track the progress of those decisions.
The members of a company have a right to know how the company is being managed. Failure to hold regular meetings of the company may be grounds for a member to file a case against the directors for mismanaging the affairs of the company.
The different types of meetings of the company are:
- Board Meetings:
These are held by the Directors of the company to discuss the day-to-day affairs of the company, e.g. allocation of finances of the company, discussing business strategies, hiring staff, etc.
There is no strict stipulation under the law to hold Board meetings, but it is only logical for the directors to meet often to discuss the affairs of the company.
- Annual General Meeting (AGM):
This is a meeting of the members and shareholders of the company, typically held once a year, where the directors update the members about the status of the company, for example, its financial progress over the past year, the dividends each shareholder is entitled to receive, etc.
It is also not compulsory for a private company to hold an AGM. However, it is good business practice that the Directors of the company should report to its members in an AGM.
Nonetheless, an AGM can be held at the request of any member of a company. This is one of the rights of the members of a company. If upon the request to the Directors to hold an AGM, they refuse to do so, a member can write to the Registrar of Companies to intervene. The Registrar may then call the AGM or compel the Directors to call the AGM. If the directors still fail to call an AGM upon the orders of the Registrar, the Directors commit an offence.
- Extraordinary general meeting (EGM):
This is a meeting of the members of the company, other than the Annual General Meeting, convened to discuss a particular issue. This is an issue that must have been communicated to them beforehand.
Typically, it is a meeting by which the directors of a company may obtain the opinion or approval of the members regarding a certain decision to be made by the company as a whole, e.g. the decision to remove a director from the company.
This meeting may be convened either by the directors or upon the request of two or more members of the company with a certain level of stake in the company. This type of meeting is more technical; consult your lawyer to advise you on the requirements to requisition this type of meeting.
P.S: Except for Board meetings, the members of a company are entitled to be given notice of this meeting not less than 21 days before the meeting.
Resolutions of the company:
The decisions of the company are reduced into writing (extracted) as resolutions. It is important to know the right resolution to extract. The wrong resolution might jeopardise a decision taken by the company. The registrar of companies may also reject a wrong resolution.
The following are the resolutions to be extracted:
- Board resolutions:
These are passed at a meeting of the Board of Directors of the company.
- Ordinary resolutions:
These are passed at an Annual General Meeting or Extraordinary General Meeting of the Company.
- Special resolutions:
These are passed in certain instances where the law requires a special resolution to be extracted, for example, a resolution to alter the objectives of the company in its Memorandum of Association or to alter its Articles of Association, or to alter the share capital of the company. They are extracted from either an AGM or an EGM.
Special resolutions must be registered with the Registrar of Companies within 30 days after they have been passed.
However, the other types of resolutions may be registered with the Registrar whenever the need arises.
Read again next week for the next part in the series.
Kokunda Patience- Associate Partner, Lawgic Advocates