Company meetings

The importance of meetings

• Company decisions are collective decisions

• Small companies and big companies• Many technical rules governing the

conduct of company meetings• The courts recognize that meetings are

generally not run by lawyers and that a liberal interpretation is required.

• In Maori Development Corporation Ltd v Power Beat International (1995) 7 NZCLC 260:

“it is undesirable that where lay people are trying to exercise the democratic rights of shareholders, especially at a meeting under the control of a lay person, what they do and say should be given a narrow and technical construction, particularly where that can be seen as extremely thwarting the intention of the shareholder in relation to the exercise of a right to vote.”

Types of meetings

• Two types of meetings are provided for by the Act: annual meetings and special meetings

• The meeting must be properly constituted:- Proper notice must be given- The quorum or minimum number of persons

must be present- No person entitled to attend should have been

excluded- Any procedures followed in the company’s

constitution must be followed

First annual meeting

• Requirement removed from the Companies Act• The only meetings which need to be held are the

annual meetings• S 115 (2) : A company may not hold its first

annual meeting in the calendar year

of its incorporation but shall hold that meeting within 18 months of its incorporation.

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Annual meetings

• The requirement to hold a meeting of shareholders once in each calendar year

• The responsibility of the board of directors to call the meeting and the company is obliged to hold the meeting on the day for which it is called

• Once the meeting has been called, the directors have no power to postpone it

• When should the meeting be held?

not more than once in each year;

not later than 6 months after the balance sheet date of the company; and

not later than 15 months after the previous annual meeting.

• The Act does not state what business is to be transacted at the meeting. The ordinary business will be:

- The consideration of the accounts and directors’ and auditor’s reports

- The election of directors in place of those retiring- The appointment of directors

• Other matters may be transacted at the annual meetings but particulars of this will have be given to shareholders in the notice of the meeting. In many companies, the meeting will be little more than a formality.

• Signed resolutions:

• The Act makes provision for decisions without a meeting where the required majority of shareholders signs a resolution. If all the business of the annual meeting is dealt with in this way, there is no need to call an annual meeting.

Special meetings – S 116

• Every meeting of shareholders, other than an annual meeting is known as a special meeting. They are called by the board of directors or by any person who is authorised to do so by the constitution? Any business which may be properly dealt with by the shareholders may be considered at a special meeting, provided that sufficient notice has been given.

• The shareholders can call for a special meeting. • Such a request is required to be in writng and

must be made by shareholders whose shares carry at least 5% of the voting rights entitled to be exercised on that issue.

• The request does not have to be signed; it is preferable and it must also state the reason for requiring the meeting so that proper notice can be given.

• When the directors receive a request of this nature, they are obliged to call a special meeting and they have to act within a reasonable time.

• The power of the court to order a meeting – S 118.

• It is impracticable to call or conduct a meeting in the manner prescribed by the Act or the constitution

• It is in the interest of the company that the meeting be held