Annual general meetings are compulsory for both private limited liability companies and public companies by the provisions of the Companies and Allied Matters Act. The law has a reason for making it compulsory and for setting out rules to be complied with to ensure the general success of the meeting. The reason is no more than to protect the interest of shareholders and investors. It is up to you as a shareholder to take advantage of this opportunity. Where the leadership of the company fails to convene an annual general meeting , the law makes provisions for it to be convened through other means. An important factor is that the law is very interested in the conduct of annual general meetings and their outcome. In addition, the law provides guidelines that will ensure that everyone who is part of a company is not left behind under any guise. The law is strict about it.
By this article, you will get to know why you need to attend annual general meetings, everything you need to know about the meetings and the expectations of the law.
WHY YOU NEED TO ATTEND ANNUAL GENERAL MEETINGS
There are legion of reasons to attend the annual general meeting of your company. Here are some of the most compelling ones;
1. Annual general meetings provide the forum for taking decisions that affect the company.
2. Also, it is an Opportunity for the shareholders to ask questions and raise relevant matters for discusssion.
3. It is also a chance to meet the directors of the company and ask questions about how the board functions generally and to get to know the directors personally.
4. Members of the company get to know and even lend their opinions by voting on significant matters that affect the company.
5. Matter of fact, members are called upon to elect directors of the company and an attendance of the annual general meeting is an opportunity to vote the person of your choice to be director.
6. Then again, the financial status of the company is revealed by the directors, which is an opportunity for investors to take major decisions and the shareholders to ask auditors questions and get their answers on the spot and also find out where the company intends to channel its funds in the next financial year.
7. An annual general meeting is also a great occasion for investors to network. Find out why another investor is interested in the company and try to improve your own knowledge of investments.
8. It is also a great opportunity for the shareholders to increase their knowledge of the affairs of the company and get first hand information.
ALL YOU NEED TO KNOW ABOUT ANNUAL GENERAL MEETINGS.
What is Annual General Meeting?
It is a general meeting held in each year by a company. By the provisions of the law, not more than 15 months shall elapse between the date of one general meeting and another. However, where a company holds its first annual general meeting withtin 18 months of its incorporation, it need not hold it in that year or in the following year.
Where need be, the Corporate Affairs Commission can extend the time within which any annual general meeting shall be held, by a period not exceeding three months.
What Activities Take Place at an Annual General Meeting?
The ordinary activities that you find in a typical annual general meeting are; declaration of dividend, the presentation of financial statements and the reports of directors and auditors, the election of directors in the place of those retiring, the appointment, and the fixing of the remuneration of directors and auditors and the appointment of members of the audit committee.
Who Can Get Inivited to an Annual General Meeting?
Like you guessed, not everyone who has dealings with a company gets invited to an annual general meeting of such company. The law is clear on who should attend an annual general meeting. The qualified persons are; The director of the company, the company secretary, every member of the company, every auditor of the company for the time being and every person upon whom the ownership of a share devolves by reason of his being a legal representative, receiver or a trustee in bankruptcy of a member.
How do the Qualified People get Invited to an Annual General Meeting?
Persons who are entitled to attend annual general meeting get invited when notices are given to them personally or sent to them by post or to their registered address or any address they supply that is in Nigeria.
What is the Length of Time Given by an Invite to an Annual General Meeting?
The length of notice is 21 days. It begins to count from the day the invite was sent out.
What Happens Where a Company Fails to Send a Notice of an Annual General Meeting to those Who are Qualified by Law to Attend?
Where a company fails to send notice of general meeting to a person qualified to attend the annual general meeting, the implication is that the meeting will be cancelled.
However, where the failure was as a result of an accidental omission, the meeting would not be cancelled.
What if the Notice Contains an Error?
If there is an error in the notice regarding place, date, time or general nature of the business of a meeting, it will not result in the cancellation of that meeting. Unless it is shown that the officer of the company responsible for the error failed to show diligence and care.
Where Can a Company Host its Annual General Metting?
The law provides that an Annual General Meeting of any Nigerian Company must be held at a venue in Nigeria.
Who Presides Over an Annual General Meeting?
The chairman of the board of directors usually takes charge of the annual general meeting. However, if there is no such chairman, or the chairman is not yet at the venue of the meeting one hour after the time scheduled for the meeting, then members of the board of directors will elect a chairman among themselves to conduct the meeting.
What Happens where the Company Fails or Neglects to Call an Annual General Meeting?
Then, Corporate Affairs Commission will direct the calling of the meeting either of it’s own accord or upon an application by any member of the company.
The commission may in addition, give consequential orders. It may also give directions that will alter or supplement the operation of the company’s articles of association as it relates to the calling, holding and conducting of the meeting.
The direction that may be given in this case by the Commission shall include include a direction that one member of the company present in person or by proxy may apply to the court for an order to take a decision that shall bind all the members.
Furthermore, when an general meeting is held based on the direction of the Corporate Affairs Commission, then such meeting is deemed to be an annual general meeting of the company.
In addition, where the meeting as ordered by th Commission is held in the year after the year in which the company defaulted in calling it’s annual general meeting, that meeting will not be considered the annual general meeting for that year unless at the meeting, the company resolves to treat it as such.
This resolution made by the company shall be filed at Commission within 15days of passing it.
What are the expectations of the law.
The law expects shareholders to take this opportunity and attend general meetings. The law recognises your right as a shareholder and is safeguarding it by reeling out measures to protect it. In addition, the law expects you to ask questions and make useful contributions to the well being of your company. In that way, shareholders are able to hold the management accountable for their actions.
The aim of this article is to simplify Annual general meeting as provided by the Companies and Allied Matters Act as much as possible. This means, that the procedure and the regulation surrounding it has been broken down as much as possible without losing the substance of what the law intends.
In addition, convincing reasons have been set out for you to attend annual general meetings.
I hope that this article will inspire you to do the needful.
Kindly leave your opinion in the comment section.
Somtochukwu Clare Uzoegbo Esq
Somto is graduate of Nnamdi Azikiwe University, Awka. She has interest in Alternative Dispute Resolution, Corporate and Commercial Law Practice and Civil Litigation.
Somto is an Associate at ICFNL Legal Practitioners, a leading law firm in dispute resolution and litigation. She is part of the department of Civil Litigation and Corporate Practice at ICFNL.
Joseph Jagunmolu Ogunmodede is the Founder/CEO of THE LEGAL DIARY.
He is a Double First Class lawyer from the prestigious University of Ibadan and the Nigerian Law School. Joseph is an Asaociate at Udo-Udoma and Belo-Osagie with interest in Corporate Law, Energy Law, Real Estate Law and Commercial Litigation.