CORPORATE GOVERNANCE: SHAREHOLDERS IN GENERAL MEETING
Types
of Company Meetings
The shareholder's power to take decisions regarding matters of the company according to the combination of articles and statutes. The shareholder's decisions are usually taken by resolutions that are governed by the Act (S131-152). The management of the company is run through meetings of the company’s shareholders, especially when major decisions are to be taken. All of the meetings of shareholders are general meetings that can be attained by all the members. (S147) However, for a certain class of members whose rights are affected, class meetings are also held. (S279)
Statutory
Meeting and Statutory Report
A
statutory meeting is the first meeting of the members after the commencement of
the business. It is held once in the lifetime of the company and within 180
days after it starts its business or within 9 months after the certificate of
incorporation the statutory meeting should be held. If before holding the
statutory meeting, the Annual Meeting is held then there is no need for a
statutory meet. This exception is not applied to public companies converted
from private companies after one year of incorporation. S131(1)
The
requirements to hold the statutory meeting are;
·
It should be held within 180 days from
the date company is entitled to business
·
Notice of the statutory meeting should
be sent to members at least 21 days before with a copy of the Statutory report
·
The director has to deliver a copy of the
statutory report, along with a report of auditors to the registrar for
registration
·
The report shall include, list of
members, shares allotted, and the amount received for them, Particulars of
directors, managers, and secretary, particulars of the contracts, details of
company affairs with fee and brokerage paid.
·
Members have the liberty to discuss the
affairs related to the formation of the company.
The Annual General Meeting
The
annual meeting is a required meeting under the Act for every company. Through
this meeting, shareholders control the affairs of the company. The shareholders
can ask any question including the accounts in the annual meeting. This meeting
protects the interest of the shareholders. This meeting is not for the
single-member company. S134(4) The requirements of this meeting are
·
It must be held every year
·
The first annual meeting should be
conducted within 16 months of incorporation
·
The subsequent Annual general meeting is to be
held with 120 days of the closing of the company's financial year. If it is not
held due to a valid reason the registrar may extend the time not exceeding
thirty days
·
Notice of the date of meeting to be sent
21 days. For the listed companies it has to be published too
·
The annual meeting is a listed company
in the town where the company’s office is registered.
·
Default invoke penalties for all
officers party to default
The
annual meeting is usually conducted for the following matters.
·
Annual Accounts of the company
·
Declaration of dividend
·
Retirement and appointment of auditors
·
Retirement of directors by rotation,
hiring, and appointment of their placement.
The
Extraordinary General Meeting
All
the other general meetings other than annual and statutory meetings are called
extraordinary general meetings. These meetings are held to deal with some
urgent matters that cannot be postponed till the Annual meeting S133. The
director may call the meeting at any time to deal with any matter that needs
the approval of the company S133(2). If any member wants to have an
extraordinary general meeting he has to sent a request to the directors. The
directors will call for voting and if one-tenth will agree the meeting will be
held.
For
the requisition meeting, the notice will be given to the registered office. If
the address is not in Pakistan then the place mentioned for the communication
will be provided the notice. To the joint-holders, the name list on the first
in the document will be given the notice. If notice delivered to a member dies,
it will be considered that the notice was duly served to his legal heirs. The
non-observance of the provision will bring the penalty.S55
The
requisition must contain
·
the object of the meeting,
·
signed by the requisitionist,
·
it will be deposited to the registered
office of the company
·
If directors don’t proceed within
21days, the requisitions may on the vote of the majority may call themselves a
meeting
·
The meeting will be held within 90 days
·
The meeting will be called in a manner
as prescribed for the meeting called by the directors
·
Any expense incurred by the
requisitionists as a result of a delay on the part of directors shall be repaid
by the company
The
general meeting decisions become invalid on the petition of members having not
less than ten percent of the voting power. The reasons for declaring meeting
invalids are material defects or omissions in the notice or irregularity in the
proceedings of the meeting that prevent the members from using their rights
effectively. The petition has to be made within thirty days.S160A
Resolutions in Meeting and their
Types
A
resolution is a proposal put to vote a meeting for acceptance by its members.
The business meetings are conducted through resolutions. There are two types of
resolutions in the Ac, ordinary Resolutions and Special resolutions.
Special Resolutions
The
special resolution is passed by the majority of the members not less than
three-fourth of the company at present or made through a proxy. The notice of
the special resolution to be passed not less than 21 days. All the members are
entitled to attend and vote at any such meeting. The resolution may be proposed
or passed as a special resolution ats meeting of which less than twenty-one days
notice has been given. Voting is such a meeting to be held by hands or by-poll.
The matters that can be discussed in the meeting are
·
Alteration of memorandum or change of
registered office
·
A change in the name of the company
·
Alteration of Articles
·
Issue of further shares
·
Creating a reserve capital
·
Commencing a new business
Ordinary
Resolutions
Ordinary
Resolution is carried by a simple majority. Members of the company entitled to
are in person or through proxy can pass the resolution. They the have option to
vote through ballot according to the procedure specified in the general
meeting.
Members of a Company
The
company is constituted by the members or the shareholders. Section 118 defines a member of the company, as a person who has
subscribed to the memorandum and has registered as a member of the company. The
person who has allotted any kind of share or if not shared the shares then has
agreed to be a member of the company and has been registered is also called a
member of the company.
Legal Capacity of Member
The
person becoming a member of the company must possess the legal capacity to
enter into a contract and become a member. The qualification of a member is not
specified. However, the member must fulfill some basic rules;
·
Minor cannot be a member by shares can
be allotted for him
·
A company can become a member if it is
allowed by the memorandum
·
An insolvent remain a member but his
shares vest in the official assignee or receiver
·
Joint owners can hold shares but they
are considered a single member
Acquiring and Relinquishing
Membership
The
membership is extinguished upon the death, transfer of shares, the exercise of
a lien over the shares by the company, upon becoming insolvent, and sales of
shares by decree of the court
·
By subscribing to the memorandum
·
By agreeing to become a member of a
company limited by a guarantee
·
By application for and allotment of
shares
·
By transfer of shares
·
By transmission of shares
·
Taking qualification of shares
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