Types and Purpose of Company Meetings
Meaning of company meetings
This is when two or more persons (shareholders or the directors or the debenture holder or of the contributories), get together at one place, at a specific time, for lawful purposes, to discuss any common issue.
Types of meetings
a. Public meetings
These are the meetings that consider matters of public concern and to which all members of the public have access, subject to physical limitations of the place where the meeting is held or conditions imposed by any law.
b. Private meetings
These are meetings attended by people who have a specific right to attend. For example, Committees members of a welfare group or of a registered company. Therefore, company meetings fall under this category.
The eight main types of company meetings
- Statutory Meeting
- Annual General Meeting
- Extra ordinary General Meeting
- Class Meeting
- Meeting of Debenture Holders
- Meeting of the Board of Directors
- Meeting of Creditors
- Meeting of Creditors and Contributories.
The following is an explanation on the above listed types of meetings;
1. Statutory meeting
Every public company limited by shares and every company limited by guarantee and having a share capital, must within a period of not less than one month and not more than 3 months from the date at which the company is entitled to commence business, hold a general meeting of the members which is to be called the Statutory Meeting. This meeting is held once in the lifetime of a company.
In this meeting, the members are to discuss a report by the directors, known as the statutory report, which contains particulars relating to the formation of the company.
Private companies are exempted from holding this meeting.
2. Annual General Meeting (AGM)
General meeting of a company means a meeting of its members for specified purposes. Public companies must hold an annual general meeting within or by the end of the six months of its financial year. Private companies are not required to hold an annual general meeting, unless they are a traded company (a corporation whose shareholders have a claim to part of the company’s assets and profits) or their articles require it.
Every company must in each year hold, in addition to any other meeting, AGM. The notice conveying the meeting must specify that it is a notice of the AGM. Every AGM must be held during business hours and on working days.
The registrar may, for any special reason, extend the time for holding any AGM by any given period; but no extension of time is granted for holding the first AGM.
There should be at least one AGM per year and as many meetings as there are years.
Ordinary Business of an AGM
The normal business transacted at an AGM depends upon the articles. The article provides that the ordinary business of such a meeting shall be: –
(i) The declaration of dividends.
(ii) The consideration of accounts.
(iii) The election of directors in place of the retiring.
(iv) Appointment of and fixing of the remuneration of auditors.
Any business which is not defined as “ordinary business” of an AGM is known as special business.
3. Extra ordinary general meeting
Any general meeting of the company which is not an AGM or a statutory meeting is called extra ordinary general meeting.
Extra ordinary meetings can be convened either by the directors whenever they think fit or on the requisition of members of the company.
Where directors think fit to convene a meeting, they do so by resolution passed at a duly convened and constituted meeting of the Board. Note that everything transacted at an extra ordinary meeting shall be deemed as special.
The extra ordinary general meeting may be convened: –
(a) By Board of Directors on its own or on the requisition of the members
(b) By the requisitionists themselves on the failure of Board of Directors to call the meeting
Extra ordinary meeting convened by Board of Directors:
a) On its own: The Board of Directors may call an extra ordinary meeting whenever some special business is to be transacted which in the opinion of the Board of Directors, cannot be postponed till the next AGM.
b) On requisition of members: – The requisite number of members of a company may ask for an extra ordinary general meeting to be held. The Board of Directors shall proceed to call such a meeting. The requisition for such a meeting by the members shall be signed:
(i) In case of a company with share capital holders of not less than 10% of the paid-up capital of the company having a right of voting in regard to the matter of acquisition.
(ii) In case of a company with no share capital, by members representing not less than one tenth of the total voting power in regard to the matter of requisition.
A requisition signed by one of the joint owners of the shares has the same force and effects as if it has been signed by all of them.
The requisition shall set out all matters for consideration on which the meeting is called and shall be deposited in the registered office of the company. The directors are required to convene such a meeting within 21 days from the date of deposit of the requisition, but if they fail to do so, the requisitionists themselves may convene the meetings, as nearly as possible in the manner required by the company’s articles for convening the meeting.
The company must compensate the requisitionists for any reasonable expenses incurred and may repay out of sums payable by the company to such directors as were in default.
Note:
Unless the meeting is called to pass a special resolution, the requisite notice for an extra ordinary general meeting is 14 days (Saturdays, Sundays, Public holidays are not included). In case of unlimited company, 7 days’ notice is required, but where special resolution is required, 21 days.
4. Class meeting
These meetings are held by a particular class of shareholders. The purpose of this meeting is effecting variation in the Articles in respect of their rights and privileges or for conversion of one class into another.
The provision for variation must be contained in the Memorandum or Articles. However, this variation must not be prohibited by the terms of issue of shares of that particular class. Such resolutions are to be passed by three-fourth majority of the members of that class.
5.Meeting of debenture holders
These meetings are called according to the rules and regulations of the trust deed or debenture bond (Rules printed on the reverse of the debenture certificates issued by the company). Such meetings are held from time to time where the interests of debenture holders are involved at the time of re-organization, reconstruction, amalgamation or winding-up of the company. The rules regarding the appointment of chairman, notice of the meeting, quorum etc. are contained in the trust deed.
The meetings of the debenture holders are called;
(i) When the terms of repayment of debentures need to be altered.
(ii) When the rights of the holders of debentures need to be alter.
6. Meeting of the Board of Directors
The management of the company is vested on the Board of Directors. Therefore, the directors are to meet frequently to decide both policy and routine matters.
The provisions regarding board meeting are:
Board meeting must be held once in every three calendar months and at least four times in every year. This provision may be exempted by the central government. Notice of board meeting shall be given in writing to every director for the time being in Kenya and at his usual address in Kenya.
7. Meeting of creditors
These meetings are called when the company proposes to make a scheme of arrangement with its creditors. The court may order a meeting of the creditors or a class of creditors on the application of the company or of liquidator in case of a company being wound-up.
Such a meeting is held and conducted in such a manner as the court directs. If the arrangement is passed by a majority of three-fourth in value of creditors and the same is sanctioned by the court, it is binding on all the creditors.
8. Meeting of creditors and contributories
These meetings are held when the company has gone into liquidation to ascertain the total amount due by the company to its creditors. The main purpose of these meetings is to obtain the approval of the creditors and contributories to the scheme of compromise or rearrangement to save the company from financial difficulties. Sometimes, the court may also order for such a meeting to be held.
When a company desires to vary the rights of debenture holders, such meetings are to be held according to the rules laid down in the debenture trust deed. They are also held to enable the company to issue new debentures or to vary the rate of interest payable to debenture holders. The term “contributory” covers every person who is liable to contribute to the assets of the company when the company is being wound-up.
About the Author
Thank you for reading this article. The author, James Ndambiri is an avid Business Advisor and Consultant: A Tax Surgeon, Proficient Accountant, Skilled Auditor, a Guru in Financial and Investment management, Expert in Business Strategy Formulation, Business Transformation Wizard, Family Business Advisor, Lecturer, Business Coach and a Family Man.
James is the Founder, Team Leader, CEO & Managing Partner of MNC Consulting Group. MNC Consulting Group is your most trusted and respected professional business consulting firm recognized by our clients for delivering excellent business advisory and consulting services that create value to their ventures.
With our focus set on value addition, we offer our clients the highest quality professional services in Audit and assurance, Taxation, Human Resource Management, Business Process Outsourcing and Consultancy and Advisory that address their business needs through attracting, recruiting and retaining knowledgeable and passionate professionals who enable us to deliver superior results while contributing positively to the community in which we live and work.
Make us your business partner by always consulting with us.
‘‘With us, you are in safe hands”
