If you had to identify, in one word, the reason why the human race has not achieved, and never will achieve, its full potential, that word would be “meetings.” ~Dave Barry, “Things That It Took Me 50 Years to Learn
The world of business seems to be obsessed with meetings. Meetings do have their usefulness as this is often where formal decisions regarding the organisation are made and the holding of these meetings give legal effect to these decisions taken. It is one of the cornerstones of good corporate governance and it is important to ensure that meetings are held correctly in accordance with company law and the constitution of the company.
When considering holding any meeting, there are common points that should be considered and these include:
- Power to call a meeting – who has the power to convene a meeting
- Notice – amount of notice to be given the attendees
- Who is entitled to attend – Who is entitled to receive notice of the meeting
- Quorum – the number of attendees to be present before the meeting can proceed
- Voting – Attendees might be able to participate but not vote
- Minutes – record of decisions taken at the meeting
This article will concentrate on company meetings and what must be complied with to allow a meeting to be held correctly. Most private limited companies have adopted a new constitution or rely on the default provisions of the Companies Act 2014 and any shareholders agreement may contain specific requirements for company meetings. These documents should always be reviewed prior to convening any meeting.
Directors Meetings
The day to day running of a company is delegated to the directors by the members.
The regulation of directors meetings are very much a matter for the directors to determine. Most companies rely on the default provisions of the Act which provides the directors may meet and dispatch their duties as and how they see fit. This gives the directors flexibility to meet and make decisions.
A director may convene a board meeting by giving reasonable notice to the other directors unless otherwise stated in the constitution. What constitutes reasonable notice will depend on the company, number of directors and location of the directors. Only the directors are entitled to receive notice to the meetings but other individuals may be invited to attend.
An agenda may be required if a number of points are to be discussed and it also allows for directors to be prepared for the meeting. Supporting papers and documentation should be circulated in advance of the meeting so all the directors are prepared and the meeting can concentrate on discussion and agreement instead of wasting time readings papers at the meeting.
The quorum for a directors meeting is typically two directors however if there are a large number of directors the company may wish to increase the quorum. If the meeting is to be held electronically the constitution should contain provisions for holding meetings electronically.
Directors should declare any interest in contracts of proposed contracts to be discussed at the meeting and the constitution should be reviewed regarding whether the director can vote on the contract.
The Chairperson may be elected for a period of time or at every meeting. The Chairperson plays an important role ensuring:
- the meeting is run correctly,
- adequate time is given to each point on the agenda,
- facilitate discussion and that every director is given the opportunity to make their point
- not allow a person to dominate the meeting
- ensure that minutes are prepared and they are an accurate reflection of the discussions of the meeting.
Decisions are typically made more informally at directors meetings. Usually each director has one vote and the Chairperson may have a casting vote in the event of a tie.
The Companies Act requires that minutes of all proceedings at meetings of directors and any committees of directors should be entered into a minute book as soon as possible. The company secretary is usually charged with recording the minutes. The minutes should record the decisions of the directors and any other relevant information the directors wish to have recorded. The Chairman should review the minutes to ensure they are an accurate reflection of the meeting and the minutes should then be circulated to the directors.
Members Resolutions
The members of a company retain certain powers as the directors do not have full power to make all decisions. Members may pass two types of resolutions; ordinary and special resolutions.
Ordinary resolutions are required to carry out routine business or where the Companies Act refers to the “by the company in general meeting”. Ordinary resolutions may be passed by a simple majority of a show of hands or the votes cast by a poll. 7 or 14 days’ clear notice should be given to members of a general meeting to pass an ordinary resolution.
Special resolutions may be passed where 75% of the votes cast by members in person or by proxy at a general meeting. 21 days clear notice should be given to the members of the general meeting at which the special resolution will be considered. A form G1 should be filed at the CRO within 15 days of the passing of a special resolution.
AGM’s
Every company is required to hold an Annual General Meeting in each calendar year. The AGM should be held within 9 months of the financial year end and no more than 15 months from the last AGM. The purpose of the AGM is to transact certain business as set out in the Act that includes:-
- Considering the financial statements, directors’ report and auditor’s report
- Review by the members of the affairs of the company
- Declaring a dividend
- Election of directors
- Re-appointment of the auditors
- Fixing the remuneration of the auditors
21 days’ notice must be given to all the members entitled to receive notice and also the auditor is also entitled to receive notice of the AGM. The meeting may be held at short notice if all the members and the auditors consent in writing.
The notice should be served in writing and set out the details of the location and time of the meeting. The notice may be served electronically however the member must consent to the receipt of electronic communications. The AGM must be held in the State unless the constitution provide otherwise.
The quorum for an AGM will depend on what is contained in the constitution. Most private limited companies relying on the default provisions of the Act the quorum will be 2 members present in person or by proxy and for PLC’s & companies limited by guarantee it is 3 members present.
Proxy forms allowing members to appoint a proxy to represent them at the meeting should be issued to all members and typically these have to be lodged at the registered office within 48 hours before the meeting is held.
Voting at an AGM is usually done by a show of hands and is determined by one vote per member entitled to vote. A poll may be demanded by the Chairperson or by three members present in person or by proxy. Voting on a poll is based on one share one vote.
The Chairperson shall run the meeting in accordance with the notice of the AGM. Minutes should be recorded of the decisions taken at the meeting. The minutes should be signed by the Chairperson and inserted into the minute book.
EGM’s
An extraordinary general meeting is any other meeting of members. An EGM may be called by the directors or by the members holding at least 10% of the issued share capital. An EGM may transact ordinary or special business and as set out above, it will depend on what type of resolutions is being proposed will determine the notice period and the voting.
The rules regarding quorum, notice, voting and minutes as set out for the AGM also apply to EGM’s.
Written Resolutions of Members
Members may pass resolutions by way of written resolution instead of holding EGM’s. In order for a resolution to be passed the text of the resolution that would have been put to the meeting should be signed by every member entitled to vote at the EGM.
It is important to remember that company meetings should be held correctly. Time should be taken in advance of making a decision to understand what type of meeting is required and the necessary steps to be followed so that they decisions made have legal effect.
How Can CLS Help
We can assist companies to update the constitution and the provions regarding company meetings and also prepare draft minutes to record changes in the corporate structure. For more information please contact one of the Co Sec Team on 059 9186776 or cosec@clscs.ie
Please Note:
Our CLS Insights aims to bring you practical information and news on Company Law and Company Secretarial. We cover the topics that matter to your business and give practical tips and also the benefit our experiences. Please remember this article is a guide and legal advice should always be obtained. If you have any queries please contact one of the team and we would be happy to help.
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