You'll hold shareholder meetings for many different reasons, regular progress and updates meetings and to manage shareholder decision making on extraordinary events.
You may even hold them remotely and enable decision making via remote and written format.
There are a number of rules surrounding how shareholders vote, the notice periods of any meetings that you propose to call and how many shareholder votes may be required to approve actions requiring their consent, which have been proposed by the board.
Some shareholder rights are also added by the UK law.
Annual general meetings (AGMs)
The law no longer obliges private limited companies to hold annual general meetings of their shareholders – although sometimes, a company's articles of association will require them to do so. (Farillio's standard articles do not include this requirement.)
What shareholders vote on/must approve
There are some decisions that your board of directors are probably not able to decide or action without shareholder approval.
We've covered these in the section immediately above, where you will also find the template resolutions that your board must use to propose their intended actions to the shareholders, so that they may be approved.
It is important that the approval process above is followed correctly, or the directors will be in breach of their legal duties to the company – with some fairly serious consequences possible as a result, including the ability for the shareholders to have them removed – and, in the worst cases, they may face fines and/or disqualification as a director.
How shareholders vote
Votes are counted based on either a show of hands or a poll. Some decisions – for example, the approval of credit transactions – can be decided on the basis of reaching over 50% of the votes. This is known as a simple majority, and the decisions that use this voting type are known as ordinary resolutions.
On a show of hands, each member has one vote – but on a poll, the votes will be weighted by the voting rights attached to the shares held by each member. Any person entitled to vote at the meeting may demand that a poll is held on a matter either before it has been voted on, or immediately after it has been voted on by a show of hands.
However some more complex decisions – for example, changes to the articles of association – are known as special resolutions, and these must be decided by a majority vote of at least 75% of the voting members.
Just like board meetings, there must be a minimum number of shareholders present at a shareholder meeting (usually 2), unless you only have one shareholder.
Your articles of association should specify the minimum number.
Directors must remind shareholders that they’re welcome to appoint a proxy if they can’t attend the shareholders meeting.
A 'proxy' is someone who can attend the shareholders meeting and vote on a poll or a show of hands on the shareholder's behalf.
A shareholder can appoint a proxy within a certain amount of time (not less than 48 hours) before the meeting.
What do you need to hold shareholder meetings?
Assuming that it's just a straightforward shareholder meeting that you want to hold...
Resolving to convene a shareholder meeting.
2. A notice to the shareholders informing them when the meeting will take place
Again, there's no magic to this document – provided that the time, date and place of the venue is very clear, as well as the purpose of the meeting and what is proposed for discussion.
Having said that, if the directors intend to propose a resolution for the shareholders to vote on, the exact text of that resolution must be provided in this notice to the shareholders, otherwise the resolution will not be effective.
In addition, shareholders must be given at least 14–21 clear days' notice of the meeting and reminded about their right to appoint a proxy up to 48 hours before the meeting takes place.
The only exception to this notice period is if all those attending with voting rights have given written and signed consent to a shorter notice period.
Check your articles of association, as they will often specify the notice time frame that you'll need to apply and whether and how shorter notice periods should be managed.
3. Standard shareholder meeting agenda
As with board meetings, there's no magic to agendas for shareholder meetings either.
Just ensure the agenda is clear and circulated in advance, together with the notice to the shareholders informing them of the meeting, so that those attending can come prepared to discuss the items listed, and if need be, to respond by circulating their own reports or pre-reading for attendees.
4. Shareholder resolutions
You'll need these if the shareholders are being asked to vote on something.
Different voting percentages are relevant to different types of voting decision.
For more information on how many shareholders you need to vote and therefore what type of shareholder resolution you need to pass, see our guide to shareholder ordinary and special resolutions.
Again, if your shareholders are geographically spread out, you may prefer to send them written resolutions to approve rather than require their physical attendance at a location.
Farillio's template written resolutions and what's needed in relation to each of them is set out in the section immediately above.
If shareholders meet in person, those templates can be revised to record the outcome of their decision making and the resolutions can then be filed, as and where needed, with Companies House.
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