Shareholders and Company meetings Flashcards
What is a shareholder ?
A “shareholder”, subject to section 57(1), means the holder of a share issued by a company and who is entered as such in the certificated or uncertificated securities register, as the case may be.
For purposes of the Governance of companies the term “shareholder” has the meaning set out in section 1, but also includes a person who is entitled to exercise any voting rights in relation to a company, irrespective of the form, title or nature of the securities to which those voting rights are attached. (i.e. this definition includes the holder of a debt instrument - i.e. securities like shares, debentures and other instruments - with voting rights attached)
what is a shareholders meeting ?
A “shareholders meeting”, with respect to any particular matter concerning a company, means a meeting of those holders of that company’s issued securities (i.e. shares, debentures and other instruments e.g. derivatives) who are entitled to exercise voting rights in relation to that matter;
Discuss the general requirements of a shareholder meeting
Shareholders meetings must be properly called or convened. This means that:
• The prescribed notice for convening (calling) the meeting must be given by persons authorised to convene the meeting;
• Notice of the meeting must be given to all persons entitled to receive notice of the meeting;
• The meeting must be convened for a time, date and place accessible to the shareholders of the company;
• The meeting may only commence if a quorum (the prescribed minimum of members who has to be present at the meeting before it may commence) is present.
Discuss the calling of a shareholder meeting
The Board of Directors (BD) or any other person specified in the MOI or rules, may call a shareholder meeting at any time.
The meeting must be called:
• If the BD is required (by the Act or MOI) to convene a meeting and refer a matter to decision by the shareholders. E.g. to elect a director or fill a director’s vacancy.
• When a meeting is demanded by the shareholders. The demand must be signed by shareholders entitled to least 10% of the voting rights which may be exercised in relation to the matter proposed to be considered at the meeting UNLESS the MOI provides for a lower percentage that 10%.
The demand by shareholders for calling a meeting, must:
• Specify the purpose of the meeting
• Must not be frivolous, vexatious or pertain to a matter already decided upon by shareholders.
o A demand which is frivolous, vexatious or pertain to a matter already decided upon by shareholders may be set aside by a court of law.
A demand for a meeting may be withdrawn before the start of the meeting
o If a demand was withdrawn by one or more shareholders, the company must cancel the meeting if the total voting rights of the remaining shareholders continuing the demand, falls below the percentage required to call the meeting (i.e. below 10% or the lower percentage required by the MOI.)
Discussion the notice of meeting of shareholders
A notice to convene the meeting must be sent. The notice must:
• Be in writing;
• Include the date, time and place of the meeting;
• Include the record date (if a record date was set);
• Explain the purpose of the meeting;
• Be accompanied by a copy of any proposed resolution (proposed decision);
• State that a shareholder is entitled to appoint a proxy ();
• Indicate that participant will be required to provide proof of identity at the meeting.
The notice MUST (unless the MOI prescribe longer periods of notice):
• With regards to a public company or non-profit company (which has voting members) be given
15 business days before the date of the meeting.
• With regards to any other company (e.g. a private company or limited liability company) be given
10 business days before the date of the meeting.
Discuss Postponement of shareholders meeting.
A meeting may be postponed/ adjourned for a week under the following conditions:
• If a quorum is not present: Within one hour after the appointed time for the meeting to begin;
o The chairperson may extend the one hour limit for a reasonable period on grounds of exceptional circumstances e.g. where weather, transportation, electric communication impeded the ability of shareholders to be present on time or where one or more shareholders having been delayed communicated an intention to attend the meeting and such shareholders together with others in attendance will constitute a quorum.
o The one hour rule may be altered by the MOI
• If a quorum is not present at the postponed or adjourned meeting: The members of the company present in person or by proxy will be deemed to constitute a quorum unless the MOI states otherwise.
• If a quorum is present the meeting may be adjourned on a motion by persons entitled to the majority of the voting rights of those present at the meeting.
o The adjournment may be for a fixed time or until further notice as agreed at the meeting.
o An adjournment for a fixed time may not be adjourned beyond 120 business days after the record date or 60 business days after the date of the adjournment.
• If a quorum is present and there is other business on the agenda of the meeting: Consideration for such a matter may be postponed to a later time during that meeting, without motion or vote.
Compare Ordinary and Special Resolutions
rdinary resolution” means a resolution adopted with the support of more than 50% (i.e. 50% + 1) of the voting rights exercised on the resolution, or a higher percentage determined in the MOI on condition that there is a margin of at least 10 percentage points between the highest established requirement for approval of an ordinary resolution on any matter, and the lowest established requirement for approval of a special resolution on any matter.
A special resolution” means a resolution adopted with the support of 75% of the voting rights exercised on the resolution, or a higher OR lower percentage determined in the MOI on condition that there is a margin of at least 10 percentage points between the highest established requirement for approval of an ordinary resolution on any matter, and the lowest established requirement for approval of a special resolution on any matter.
