Ch8 Meetings & Resolutions - Sheet1 Flashcards
Types of meetings
Meetings of directors
There are two types of meetings of directors, namely:
* board meetings which may be attended by all the directors; and
* meetings of committee of directors in which selected directors participate to decide for specific tasks assigned to those committees. The committees of directors may include audit committee, human resource and remuneration committee, nomination committee and risk management committee.
Meetings of members
There are two general categories of meetings of members namely:
* General meetings in which all the members who are entitled to attend and vote at such meetings according to articles may participate. There are three types of general meetings namely:
* statutory meeting;
* annual general meeting; and
* extra-ordinary general meeting.
* Class meetings (any specific class of members e.g. meeting of preference shareholders).
General meetings are chaired by the chairman of the board of directors, and other directors also attend. However, the directors do not have a right to vote at a general meeting unless they are also a member of the company. They can, then, vote at the meeting as a member.
Statutory meeting [Section 131]
Requirement
Every public company having a share capital shall hold a general meeting of the members of the company, to be called the “statutory meeting”.
In case first annual general meeting of a company is decided to be held earlier, no statutory meeting shall be required.
The requirement shall not apply to a public company which converts itself from a private company after one year of incorporation.
Time limit
The statutory meeting shall be held within earlier of:
* 180 days from commencement of business; or
* 9 months from the date of its incorporation.
Annual general meeting (AGM) [Section 132]
Requirement and time limit
Every company (other than single member company) shall hold an AGM within 16 months from the date of its incorporation and thereafter once in every calendar year within a period of 120 days following the close of its financial year.
Extension in time
In the case of a listed company, the Commission, and, in any other case, the registrar, may for any special reason extend the time within which any AGM, shall be held by a period not exceeding 30 days.
Place of meeting
In case of listed company, AGM shall be held in the town in which the registered office of the company is situated or in a nearest city.
However, at least 7 days prior to the date of meeting, on the demand of members residing in a city who hold at least 10% of the total paid up capital or such other percentage as may be specified, a listed company must provide the facility of video–link to such members enabling them to participate in its AGM.
Notice: All companies
The notice of an AGM shall be sent to the members and every person who is entitled to receive notice of general meetings at least 21 days before the date fixed for the meeting.
Notice: Listed company
In case of a listed company, such notice shall be sent to the Commission, in addition to its being dispatched in the normal course to members and the notice shall also be published in English and Urdu languages at least in one issue each of a daily newspaper of respective language having nationwide circulation.
Calling a meeting
AGM is called on the order of directors and not of the members.
1.4 Extra-ordinary general meeting (EGM) [Section 133]
All general meetings of a company, other than the AGM and the statutory meeting, shall be called extra-ordinary general meetings.
Calling EGM by the board
The board may at any time call an EGM to consider any matter which requires the approval of the company in a general meeting.
Calling EGM by the board on requisition of members
The board shall forthwith proceed to call an EGM, at the requisition made by the members:
* in case of a company having share capital, representing not less than 1/10th of the total voting power as on the date of deposit of requisition; and
* in case of a company not having share capital, not less than 1/10th of the total members.
The requisition shall state the objects of the meeting, be signed by the requisitionists and deposited at the registered office of the company.
Calling EGM by requisitionists themselves
If the board does not proceed within 21 days from the date of the requisition being so deposited to cause a meeting to be called, the requisitionists, may themselves call the meeting, but in either case any meeting so called shall be held within 90 days from the date of the deposit of the requisition.
Any meeting called by the requisitionists shall be called in the same manner, as nearly as possible, as that in which meetings are to be called by board.
Any reasonable expenses incurred by the requisitionists in calling a meeting shall be reimbursed to the requisitionists by the company and the sums so paid shall be deducted from any fee or other remuneration payable to such of the directors who were in default in calling the meeting.
Notice
The notice of EGM is required to be sent to the member’s at least 21 days before the date of the meeting similarly as of the notice of AGM.
However, in case of unlisted company, if all the members entitled to attend and vote at any EGM so agree, a meeting may be held at a shorter notice.
Power of SECP to call meetings [Section 147 & 148]
Power to give directions
The Commission has power to call general meeting of the company in case of:
* There is default in conducting AGM or statutory meeting.
* The directors did not proceed to call an EGM on the requisition of members.
The Commission may give such directions in relation to the calling, holding and conducting of the meeting and preparation of any document required with respect to the meeting as the Commission may think fit.
One member may be quorum
The above-mentioned directions may include a direction that one member of the company present in person or by proxy shall be deemed to constitute a meeting.
Cost of conducting the meeting
Any meeting so conducted shall, for all purposes, be deemed to be a meeting of the company duly called, held and conducted, and all expenses incurred for such meeting shall be paid by the company unless the Commission directs the same to be recovered from any officer of the company.
Penalty
If any person makes default in holding a meeting of the company called by the Commission or in complying with any directions of the Commission, shall be liable to a penalty of level 3 on the standard scale.
SERVICE OF DOCUMENTS AND NOTICES
Service of document/notice means delivering the document/notice in the way prescribed or permitted by the applicable laws.
2.1 Service of documents on company and its officers [Section 53]
A document or information may be served on the company or any of its officers at the registered office of the company:
a) against an acknowledgement; or
b) by post or courier service; or
c) through electronic means; or
d) in any other manner as may be specified.
2.2 Service of documents on Commission or the registrar [Section 54]
A document or information may be served on the Commission or the registrar:
a) against an acknowledgement; or
b) by post or courier service; or
c) through electronic means; or
d) in any other manner as may be specified.
2.3 Service of notice on a member [Section 55]
Address
A document or information may be served on a member:
a) at his registered address; or
b) if he has no registered address in Pakistan, at the address supplied by him to the company for the giving of notice to him.
Manner of serving
A document or information may be served on a member
a) against an acknowledgement; or
b) by post or courier service; or
c) through electronic means; or
d) in any other manner as may be specified.
When notice by post to be deemed effective
Where a notice is sent by post, service of the notice shall be deemed to be effected by properly addressing, prepaying and posting a letter containing the notice and, unless the contrary is proved, to have been effected at the time at which the letter will be delivered in the ordinary course of post.
Notice in case of joint-holders
A notice may be given by the company to the joint-holders of a share by giving the notice to the joint-holder named first in the register of members in respect of the share.
Notice to legal representative
A notice may be given by the company to the person entitled to a share in consequence of death or insolvency of a member addressed to him by name or by the title or representatives of the deceased or assignees of the insolvent or by any like description, at the address supplied for the purpose by the person claiming to be so entitled.
CONDUCT OF MEETINGS
Provisions as to meetings and votes [Section 134]
The following provisions shall apply to the general meetings of a company or meetings of a class of members of the company.
Notice
Notice of meeting is a formal document sent to each member at his registered address or other communication address provided in Pakistan.
The notice may be served to members against an acknowledgement or by post or courier service or through electronic means or any other specified manner.
Notice of the meeting specifying the place and the day and hour of the meeting alongwith a statement of the business to be transacted at the meeting shall be given:
i. to every member or class of the members of the company as the case may be;
ii. to every director;
iii. to any person who is entitled to a share in consequence of the death or bankruptcy of a member, if the company has been notified of his entitlement;
iv. to the auditors of the company.
The notice shall be sent in the manner in which notices are required to be served, but the accidental omission to give notice to, or the non-receipt of notice by, any member shall not invalidate the proceedings at any meeting.
Facility of video-link
In case of a listed company, if certain members who hold 10% of the total paid up capital or such other percentage as may be specified, reside in a city, it shall be mentioned in the notice that such members, may demand the company to provide them the facility of video-link for attending the meeting.
Participation
Members of a company may participate in the meeting personally, through video-link or by proxy.
Ordinary business & Special business
In the case of an annual general meeting, all the businesses to be transacted shall be deemed special, other than:
i. the consideration of financial statements and the reports of the board and auditors;
ii. the declaration of any dividend;
iii. the election and appointment of directors in place of those retiring;
iv. the appointment of the auditors and fixation of their remuneration.
Statement of material facts for special business
A statement setting out all material facts concerning special business shall be annexed to the notice of the meeting.
In particular, the nature and extent of the interest (if any) of every director, whether directly or indirectly shall be stated.
Where any item of business requires an approval to any document by the meeting, the time when and the place where the document may be inspected, shall be specified in the statement.
Presiding the meeting
The chairman of the board, if any, shall preside as chairman at every general meeting of the company.
If there is no such chairman, or if at any meeting he is not present within 15 minutes after the time appointed for holding the meeting, or is unwilling to act as chairman, any one of the directors present may be elected to be chairman.
If none of the directors is present or is unwilling to act as chairman, the members present shall choose one of their member to be the chairman.
Number of votes
In the case of a company having a share capital, every member shall have votes proportionate to the paid-up value of the shares or other securities carrying voting rights held by him according to the entitlement of the class of such shares or securities, as the case may be. However, at the time of voting, fractional votes shall not be taken into account.
Note: please note carefully that we have used the word ‘proportionate to the paid up value of shares’ rather than ‘equal to the paid up value of shares’. This is because of the various classes of share capital in the company. If the company has more than one class of shares then voting rights of one class may differ from other but whatever the difference may be the voting rights shall have regard to the paid up value of shares.
In the case of a company limited by guarantee and having no share capital, every member shall have one vote.
On a poll, votes may be given either personally or through video-link or by proxy or through postal ballot.
Right to vote
A member holding shares or other securities carrying voting rights shall not be debarred from casting his vote, nor shall anything contained in the articles have the effect of so debarring him.
Single member company
All the requirements of the Companies Act regarding calling of, holding and approval in general meeting, board meeting and election of directors in case of a single member company, shall be deemed complied with; if the decision is recorded in the relevant minutes book and signed by the sole member or sole director as the case may be.
Voting by show of hands [Section 141 & 142]
Voting by show of hands
At any general meeting, a resolution put to the vote of the meeting shall, unless a poll is demanded, be decided on a show of hands.
Declaration by chairman
On a vote on a resolution at a meeting by a show of hands, a declaration by the chairman that the resolution:
* has or has not been passed; or
* passed unanimously or by a particular majority;
is conclusive evidence of that fact without proof of the number or proportion of the votes recorded in favour of or against the resolution.
An entry in respect of such a declaration in minutes of the meeting recorded is also conclusive evidence of that fact without such proof.
Voting by poll [Section 143, 144 & 145]
Demand for poll
Before or on the declaration of the result of the voting on any resolution on a show of hands, a poll:
* may be ordered to be taken by the chairman of the meeting of his own motion; and
* shall be ordered to be taken by him on a demand made in that behalf by the members present in person or through video-link or by proxy, where allowed, and having not less than 1/10th of the total voting power.
The demand for a poll may be withdrawn at any time by the members who made the demand.
Poll through secret ballot
When a poll is demanded on any resolution, it may be ordered to be taken by the chairman of the meeting by secret ballot on his own motion, and shall be ordered to be taken by him on a demand made in that behalf by the members present in person, through video-link or by proxy, where allowed, and having not less than 1/10th of the total voting power.
Time of taking poll
A poll demanded on the election of a chairman or on a question of adjournment shall be taken forthwith.
A poll demanded on any other question shall be taken at such time, not more than 14 days from the day on which it is demanded, as the chairman of the meeting may direct.
Conduct and result of poll
When a poll is taken, the chairman or his nominee and a representative of the members demanding the poll shall scrutinize the votes given on the poll and the result shall be announced by the chairman.
The chairman shall have power to regulate the manner in which a poll shall be taken.
The result of the poll shall be deemed to be the decision of the meeting on the resolution on which the poll was taken.
Proxies [Section 137]
Right to appoint proxy
A member of a company entitled to attend and vote at a meeting of the company may appoint another person as his proxy to exercise all or any of his rights to attend, speak and vote at a meeting.
The appointment of proxy is not allowed in the case of a company not having a share capital unless the articles provide otherwise.
More than one proxy for one meeting
A member shall not be entitled to appoint more than one proxy to attend any one meeting. If any member appoints more than one proxy for any one meeting and more than one instruments of proxy are deposited with the company, all such instruments of proxy shall be rendered invalid.
Who may be appointed as proxy?
A proxy must be a member unless the articles of the company permit appointment of a non-member as proxy.
Notice accompanied by proxy form
Every notice of a meeting of a company shall prominently set out the member‘s right to appoint a proxy and the right of such proxy to attend, speak and vote in the place of the member at the meeting and every such notice shall be accompanied by a proxy form.
Proxy instrument
The instrument appointing a proxy shall:
* be in writing; and
* be signed by the appointer or his attorney duly authorised in writing, or if the appointer is a body corporate, be signed by an officer or an attorney duly authorised by it.
An instrument appointing a proxy, if in the form set out in Table A in the First Schedule shall not be questioned on the ground that it fails to comply with any special requirements specified for such instruments by the articles.
Time limit
The proxies must be lodged with the company not later than 48 hours before the time for holding a meeting and any provision to the contrary in the company‘s articles shall be void.
In calculating the period, no account shall be taken of any part of the day that is not a working day.
Rights of proxy
The members or their proxies shall be entitled to do any or all the following things in a general meeting, namely:
* demand a poll on any question; and
* on a question before the meeting in which poll is demanded, to abstain from voting or not to exercise their full voting rights;
and any provision to the contrary in the articles shall be void.
Inspection of proxy forms
Every member entitled to vote at a meeting of the company shall be entitled to inspect during the business hours of the company all proxies lodged with the company.
Representation of body corporate at meetings [Section 138]
Body corporate as a member
A body corporate or corporation which is a member of another company may, by resolution of its board or other governing body authorise an individual to act as its representative at any meeting of that other company, and the individual so authorised shall be entitled to exercise the same powers on behalf of the corporation which he represents.
Body corporate as a creditor
A body corporate or corporation which is a creditor of another company may, by resolution of its board or other governing body authorise an individual to act as its representative at any meeting of the creditors of that other company and the person so authorised shall be entitled to exercise the same powers on behalf of the corporation which he represents.
Representation of government at meetings [Section 139]
Power to appoint
The Federal Government (through concerned Minister-in-Charge) or a Provincial Government, as a member of a company, may appoint such individual as it thinks fit to act as its representative at any meeting of the company or at any meeting of any class of members of the company.
Rights of appointed individual
An individual appointed to act as aforesaid shall, for the purpose of the Companies Act, be deemed to be a member of such a company and shall be entitled to exercise the same rights and powers, including the right to appoint proxy, as the Federal Government or Provincial Government may exercise as a member of the company.
Quorum of general meeting [Section 135]
Meaning of quorum
Quorum means certain minimum number of members of a company as is fixed as competent to transact business in a general meeting of members in the absence of the other members. Any business transacted in a meeting without quorum shall be void.
Minimum quorum requirement
Listed company 10 members present personally or through video link representing at least 25% voting power (own or proxy).
Other company having share capital 2 members present personally or through video link representing at least 25% voting power (own or proxy).
Company not having share capital As provided in the articles.
Larger Quorum
A company may fix quorum larger than the above-mentioned minimum quorum by its articles.
Absence of quorum
If the required quorum is not present at the meeting within half an hour from the time appointed for the meeting, the meeting shall be:
* dissolved, if called upon the requisition of members; and
* adjourned to the same day in the next week at the same time and place, if called by the directors on their own.
Quorum at adjourned meeting
If a quorum is not present within half an hour at adjourned meeting, the members present in the meeting (either personally or through video link), not being less than two, shall be a quorum, unless the articles provide otherwise.
Court declaring a general meeting invalid [Section 136]
Petition criteria
Members having not less than 10% of the voting power in the company may file a petition that the proceedings of a general meeting be declared invalid by reason of a material defect or omission in the notice or irregularity in the proceedings of the meeting, which prevented members from using their rights effectively.
Time limit
The petition shall be made within 30 days of the impugned meeting.
Court order
The Court may declare such proceedings or part thereof invalid and direct holding of a fresh general meeting, if satisfied.
Notice of resolution [Section 140]
Resolutions to be stated in notice
The notice of a general meeting of a company shall state the general nature of each business proposed to be considered and dealt with at a meeting, and in case of special resolution, accompanied by the draft resolution.
Resolution by members
The members having not less than 5% voting power in the company may give notice of a resolution and such resolution together with the supporting statement, if any, which they propose to be considered at the meeting, shall be forwarded so as to reach the company:
* in the case of a meeting requisitioned by the members, together with the requisition for the meeting;
* in any other case, at least 10 days before the meeting; and the company shall forthwith circulate such resolution to all the members.
Resolution passed at adjourned meeting [Section 146]
Where a resolution is passed at an adjourned meeting of:
* a company;
* the holders of any class of shares in a company;
* the board; or
* the creditors of a company;
the resolution shall, for all purposes, be treated as having been passed on the date on which it was in fact passed, and shall not be deemed to have been passed on any earlier date.
