Resolution in Lieu of Annual General Meeting

Calling of an AGM

The Director or Board of Directors calls for an AGM and sends notice of the AGM to all shareholders of the company.

According to the Companies Act, it is a legal requirement that all shareholders of a company should receive the notice 21 days prior to an upcoming AGM regarding the date, time, location and agenda by hand or via post.

This notice can be sent to all the shareholders via email provided this provision is mentioned in the company’s Memorandum of Incorporation.

An AGM may also be called at a short notice if all shareholders agree to it. Just be sure to inform all the shareholders of their right to appoint a proxy.

The AGM is run by the chairperson who may or may not be a Director of the company and a person nominated by the Directors is appointed to take down the minutes of the meeting.

There should also be a quorum present. A quorum can consist of two people unless your company constitution states otherwise or where the company may be a single member/shareholder company.

Types of Shareholder Resolutions

Special Resolutions

(a) A special resolution must have the support of at least 75% of the votes cast if passed at a General Meeting – see the Act in respect of special resolutions proposed as written resolutions. Certain actions can only be carried out by special resolution, such as amendment of the MOI.

(b) All special resolutions must be notified to Companies and Intellectual Property Commission (CIPC) within 15 days of being passed. Depending on the nature of the resolution, a specific Companies House form may need to be filed, as well as the text of the resolution itself.

Ordinary Resolutions

Unless the Act or the MOI specifies that a special resolution is required, wherever the approval of shareholders is required an ordinary resolution will suffice. This will need to be passed by a simple majority of the votes cast if passed at a General Meeting – see the Act in respect of ordinary resolutions proposed as written resolutions.

Entrenched provisions

The MOI may state that amendment or deletion of certain entrenched provisions requires more than 75% of the votes cast at a General Meeting. If it is intended to propose a resolution to effect such a change, the same procedure should be followed as for a special resolution, but applying the higher approval threshold.

Resolutions requiring special notice

(a) The following ordinary resolutions require special notice to be given to the company (but these are not "special resolutions"). "Special notice" means that notice of intention to propose the resolutions must be given to the company at least 28 days before the relevant General Meeting:
(i) removal of a director under the companies act;
(ii) appointment of a director at the same meeting to replace a director who has been removed;
(iii) to appoint as auditor anyone other than the current auditor;
(iv) to remove an auditor before the end of their term of office.
(b) The special notice requirement is a separate requirement to the requirement to give notice to shareholders.

Written Resolutions

Almost any resolution which can be passed by shareholders in General Meeting can also be passed in writing without a General Meeting by following the procedure under the Act, even if this is not permitted in the MOI. The only exceptions are resolutions to remove a director or auditor before the end of their term of office, which must always be dealt with at a General Meeting.

Making decisions at an AGM

The decisions at an AGM are made by special and ordinary resolutions. Shareholders will vote on the topics raised and their voting result will determine the type of resolution produced.

• An ordinary resolution is passed by a simple majority (50% plus one).
• A special resolution is used less frequently and it requires 75% of the votes.

The voting is either carried out by the show of hands where one hand equals to one vote. You may also vote by a poll. Therefore, one share equals one vote.

The record of what was discussed at an Annual General Meeting is called “the minutes of the meeting”

The minutes are maintained in a minute book which is usually kept with the company’s corporate documents. The company Directors may decide who maintains the minutes of the AGM.

Members of the company, such as other Directors or Company Secretary, have the right to look the minutes of the meeting and request a copy for their records.

If you wish to outsource the minute recording to a company, such as Accountant Online, you will be provided with a draft of a minute book and you can fill it in accordingly. The official minutes are usually approved by the chairperson or by the members before the next AGM is held.

All members of the company that are entitled to attend and vote at an AGM to sign a written resolution confirming:

• they have received the financial statements of the company;
• all matters that would usually be resolved at the AGM are resolved; and
• confirming no change to the appointment of the statutory auditor (if any).

It is important to note that the written resolution must be a unanimous written resolution and the waiver must be in place before the latest date for holding the AGM.

What are the consequences of not holding an AGM?

Where a company fails to hold an AGM, a member may apply to the Director of Corporate Enforcement to call or direct the calling of the AGM. The company and any officers of it are liable to a category three offence. If convicted of a category 3 offence, a director faces a hefty fine.