Meeting

All Meeting

Annual General Meeting

This meeting is a recurrent affair of every company every year (sec. 81). It deals with normal business of the company and provides a forum for the shareholders to meet at least once in a year to discuss company affairs. It being a regular yearly event, is also known as the AGM. However, it is also referred to as Ordinary General Meeting or OGM. It enables the ordinary shareholders to exercise their rights and privileges of their membership and proprietorship of the company and ultimate control over its management.

Business of the general meeting

The company in general meeting can do all acts except those delegated to the directors and other persons by its articles. Such acts are done by votes of the majority. When a meeting is convened with notice served to all shareholders, but only a part of them appear, a majority part of those that appear may pass a valid resolution. It means the shareholders who, on receipt of the notice decide not to attend, leave matters as in the agenda, to be decided by the attending shareholders.

The normal (ordinary) business done in an Annual General Meeting are as follows, however, regulation 51 may also be studied :

a) To adopt the statement of annual accounts i.e. the Balance Sheet and the Profit and Loss account, together with the report of the auditors thereon. [Section 183 sub-section (1) and (3)]

b) To approve the directors report. [184(1)]

c) To elect directors in place of those retiring. [91(2)]

Extraordinary General Meeting

Any meeting of the shareholders other than the statutory and annual general meeting (AGM) is called the Extraordinary General Meeting (EGM). It is convened to do some urgent business which is not to be deferred till the holding of the next annual general meeting. Where it is necessary to pass a special or extraordinary resolution, an extraordinary general meeting has to be called. However, todays corporate practice often combines the two. That is, where a special resolution, say for altering articles, is required to be passed and also at the same time the next AGM is due ahead, notice of 21 days is served mentioning explicitly that a special resolution (with expressed terms) will be passed, apart from the routine ordinary resolutions of AGM. This helps shorten the exercise.

Procedures- It may be called by the directors or by the shareholders. The directors at a Board meeting will decide about the calling of an extraordinary general meeting. In case it is not possible to hold a valid Board meeting, then the directors or one director, even without a quorum, can act only for calling the extraordinary general meeting. His such action may be ratified by the Board before the general meeting. Shareholders holding not less than one-tenth of the issued and paid up capital of the company may send a requisition stating the reason for such a meeting to the directors (sec.84). The directors are to issue a notice calling for such a meeting within twenty one days of such a valid requisition. The date of the meeting must be fixed within forty five days from the date of deposit of the requisition. If the directors fail to convene such a meeting, the shareholders may themselves arrange and hold such a meeting. The time limit in this case is three months. The requisitionists of the meeting are entitled to all reasonable expenses incurred for such a meeting and the company can realise the expenses from the directors in default. It is to be noted that preference shareholders have no right to sign such a requisition relating to matters other than preference shares. This kind of a meeting may be requisitioned by the debentureholders only to have their debenture rights modified. Also consult topic 149 for requisitioned meeting.

The EGM may be held at any time of the year, but the notice of such a meeting must specify the day, date, time and place of the meeting with, ofcourse, the object of the meeting. The more important, however, is that the notice should mention clearly that the meeting is an extraordinary general meeting. A lapse in mentioning the name of the meeting may make the meeting invalid. The EGM is to be convened by a notice of 21 clear days.

Though not restricted by the Act, it is advisable not to issue notice calling for such a meeting on a declared holiday. The notice must specify fairly the special business to be transacted and the intention of the company to treat such resolution of such a meeting as either ‘ordinary’ or ’extraordinary’ or ‘special’. Generally, the notice accompanies explanatory notes detailing the background and importance of the special business so that the members can fully realise its urgency and take proper interest in attending the meeting and participate in the deliberations. The explanatory note, usually in the form of a circular, explains and amplifies the notice, its importance and significance and the underlying objects of the meeting. An extraordinary resolution is one which needs to be passed by a three-fourth majority of the members present with fourteen clear days notice served beforehand. The special resolution, likewise, needs a three-fourth majority but it requires a notice of at least twenty one clear days. By ‘clear’ days it is meant that the date of notice and date of the meeting are to be excluded from the length of notice period. Section 87 of the Companies Act deals with the extraordinary and special resolutions. Topics 166 and 167 of this chapter may also be studied.

Board Meeting

This means the meeting of the Board of directors. This is purely an in-house event. Directors are the elected representatives of the shareholders and the control and administration of the company affairs are vested in them. That requires them to meet from time to time to discuss and decide matters relating to policy and for reviewing its affairs and progress. In this way, they exercise their control over the company and discharge their responsibilities to the shareholders.

Procedures- The procedure at the Board meeting is less formal than the general meetings and the directors may regulate their own meeting. Articles may also provide for the codes of conduct. But those cannot move past the Act. The directors sit for the Board meeting frequently. However, the new Companies Act - 1994 requires that the Board must meet once in every three months and at least four times a year (sec. 96). The directors may meet more often. But they must meet together as a Board to constitute a valid Board meeting. Also consult ‘collective action’ at topic 114 in chapter III.

Notice - The Chairman, Managing Director or any director can issue notice calling a Board meeting. The Company Secretary on the requisition of any one of the above shall convene a Board meeting. Such a notice under the signature of the Secretary should be qualified by the words: “By order of the Board”. A meeting convened by Secretary without authority may, however, be ratified by the directors at the Board meeting. All the directors are entitled to notice of such meeting at their usual address at a reasonable time with details of the agenda. Notice need not be given to a director who is out of Bangladesh for the time being. Sec. 95 says that notices of Board meetings are to be served to directors residing in Bangladesh only.

The length of notice should be reasonable. No such time is prescribed by the Act. Extremely short notice is acceptable if all directors can attend. But if a short notice is issued to exclude a particular director, it will render the meeting void. The notice should mention the day, date, time, place and number of the Board meeting. It should also include the agenda of the meeting.

Agenda- The agenda points should be clear, lucid and unambiguous. There is nothing in the Act on this. However, the agenda needs to be arrayed in good order so that matters are transacted conveniently at the meeting. The order of business set out in the agenda should be adhered to. If for convenience of some directors, it is desired to change the order, consent of all directors should be obtained by the Chairman at the meeting. The Board, however, can take the business in any order as it thinks proper, provided that the directors present consent to it.

Quorum - The quorum requisite for directors meeting is subject to the provisions of the articles of association of the company. Regulation 89 of the Companies Act, however, provides that the quorum necessary for the transaction of business at the Board meeting may be fixed by the directors, and unless so fixed, it shall (when the number of directors exceeds three) be three. Business at the Board meeting will be valid if only the quorum requisite is present. But this quorum should consist of disinterested directors. This is because, the directors who are directly or indirectly interested in certain matters, are not entitled to vote on the resolution of such matters. This is called disinterested quorum. If at a Board meeting there is no quorum, the meeting will be automatically adjourned to the same day next week at the same time and place. If the day, to which the meeting so adjourned, is a public holiday, then the meeting will be held on the next working day. These all ofcourse, are subject to the provisions of the articles.

Proxy- There is no room for proxy in the Board meeting. The merit of directorship is limited to the appointed individual only which cannot be delegated to any other person. So no proxy is allowed in directors meeting. A director can not send his representative or relation to attend and vote for him in a Board meeting.

Chairman- There should be a Chairman to preside over the Board meeting. The directors may elect a Chairman for their meeting and determine the period of office for which he is to hold the position (reg. 91). There may, as well, be a permanent Chairman from amongst the directors. He will preside over all the Board meetings. When he is absent a Chairman may be elected temporarily to conduct the meeting. The permanent Chairman is usually empowered to act as the Chairman of the general meeting of the shareholders. This custom has other important aspect also. When in the general meeting there will be an equality of votes, the Chairman of the meeting will have a second and casting vote which may shape the resolution. To protect that right of the vote, it is usual that there be a permanent Chairman. However, these provisions must be there in the articles which governs the administration of the company. Topic 115 may also be studied.

One man meeting

Can a single person be sufficient to sit for a meeting? This is a very relevant and competent question often encountered by students and executives alike. The very term ‘meeting’ bears the meaning of an assembly of people in plural number to meet, at a place and to discuss something. This also has the implied meaning that for a meeting to be valid, the minimum number required is two persons present individually. But it is also true that there may be circumstances where a single person can hold a meeting, for example meeting of shareholders of a particular class, where one person holds all the shares of that class. The requirements of law are satisfied when that one person signs the resolution required to be passed. The articles of a company may also authorise a quorum of one person, or the appointment of a committee of one person. Even where the article reads “two members present in person or by proxy shall be a quorum” and one individual shareholder carrying proxy or proxies appears, it shall meet the requirements of quorum.

However, the article as a general provision usually requires that no business can be transacted without a quorum. Regulation 52 of schedule - I reads “no business shall be transacted at any general meeting unless a quorum of members is present at the time when the meeting proceeds to business”. The word ‘members’ does not include the singular number nor is it so intended in the text.

From this, as such, it can be inferred that no business can be transacted or discussed by an individual alone. Moreover, it is a custom in a dignified meeting that a motion is to be moved by somebody, seconded by somebody, discussed and then carried as a resolution. This is a procedural necessity. So with all exceptions apart, for a meeting to be decent, there should be the quorum of more than one person.

The meeting of a company starts only after its incorporation. The sponsors may, however, have their meetings before incorporation of the company, but those are not recognised in the eyes of the statute. Primarily, the different kinds of company meetings are 1) Statutory Meeting, 2) Ordinary General Meeting and 3) Extraordinary General Meeting. These are the meetings meant for the shareholders of the company. The codes of these meetings are bound by statutory provisions. However, the management of the company is vested with the directors and directors also need to meet together, discuss and decide upon different issues. Their meetings are governed, mainly, by the provisions of the articles and are called directors meeting or academically, the Board meeting. So, those are the four types of meetings that usually take place in a company.

The company meetings rotate round the Board of directors, who in turn centers on the Company Secretary for convening, conducting and concluding a meeting. The Secretary is responsible mostly, if not wholly, for the smooth management of a meeting. Therefore, the Company Secretary should be aware of the codes of conduct of various company meetings.

Statutory Meeting

This is the first meeting of the shareholders of the company after its incorporation. This meeting, according to the provisions of the Companies Act (sec. 83), is to be held within a period of not less than one month and not more than six months from date of receipt of the certificate of commencement of a public limited company. Such a meeting, however, is not required for a private limited company. A statutory meeting is held once in the life time of a company. The object of such a meeting is to acquaint the shareholders about all affairs of the company since its incorporation. It affords the shareholders an early opportunity to know about the formation of the company, issue of shares, public subscription towards its share capital, the properties acquired, its development projects and immediate prospects, possibility of its success and the cash position of the company with regard to its receipts and payments up to a date within seven days of the date of the Statutory Report. Auditors may be appointed before the statutory meeting by the directors [sec.210(6)] to scrutinise such financial activities. The statutory meeting is to be convened by a notice of 21 clear days.

Business of the Board meeting

The directors in their meeting may take up anything and every thing of the company, which do not fall within the purview of the members meeting, for transaction. However, the usual businesses transacted at a Board meeting are as follows:

1. Determining overall business and management policy.

2. Issuance, allotment, call and forfeiture of shares.

3. Approving transfer and transmission of shares.

4. Issuance of debentures and allotment thereof.

5. Exercise borrowing powers.

6. Investment of company funds.

7. Appropriation of profit with recommendation of final and declaration of interim dividend.

8. Adopting annual report.

9. Convening general meeting.

10. Fixation of the period of book closure.

11. Framing and approval of company contracts and agreements.

12. Recording and correction of statutory books.

13. Filing of various returns and statements.

14. Review progress and affairs of the company.

15. Conduct any specific inquiry.

16. Appointment, promotion and dismissal of staff.

The Act, at places, also suggested certain cases which are to be brought before the Board meeting for consideration or information. One of such case is mentioned at sub-section (2) of section 133 on making memo of terms of contract etc. by any manager or other agent of the company in which company is undisclosed principal.

Committee meeting

Committee is the smaller body of the Board and may consist of one or more Combers. The directors may delegate their powers to different committees. This committee may be standing or permanent committee, like transfer or committee, budget committee etc. or adhoc committee such as committee, inquiry committee etc. These committers may meet together and transact their specific business only according to their convenience.

Class meeting

Class meetings are meetings of the particular class of shareholders like preference shareholders. The company may issue different classes of shares and may attach different rights and privileges to different classes. This sort of meetings are generally intended to alter terms or discuss about the specific interests of the holders of shares.

Debentureholders meeting

Debentureholders are a special types of creditors. This meeting is convened when it is proposed to vary the terms of security or to modify their rights, rate of interest, or to incorporate some new provisions in the deed and in the schemes of reorganization, reconstruction and amalgamation of the company. The rules and regulations for holding such meetings are either contained separately in the deed or endorsed on the Debenture Bonds.

Requisitioned meeting

So far we have learned that a company meeting may be convened by the directors or, if authorised by the articles, by the members. The Companies Act has also given a statutory power to the members of compelling a meeting to be called. This is called the requisitioned meeting. Officially this will be an extraordinary general meeting. For this purpose a requisition must be deposited at the company’s office and must be signed by members who, at the date of deposit, hold not less than one-tenth of such of the paid-up capital of the company that carries right of voting at general meetings of the company (sec. 84). If the company has no share capital, the requisitionists must present not less than one-tenth of the total voting rights of all members who, at the date of deposit of the requisition, have the right to vote at general meetings of the company. Shareholders from whom amounts are due in respect of calls are not entitled to sign such a requisition. The requisition must state the object of the meeting. It may consist of several documents in like form, each signed by one or more of the requisitionists.

Adjourned meeting

When the participants sit for a particular meeting with specific agenda points but cannot, for various reasons e.g. want of quorum, lack of time, difference in opinion, external interruptions etc., conclude the meeting, it is adjourned until the next session. Generally it is the Chairman of the meeting who declares the adjournment. But even if circumstance does not permit such a formal declaration; say for any untoward situation, the meeting is automatically adjourned. In normal situation, the meeting is adjourned to next week same day and time. But it can be deferred until any agreed time. There are, however, certain specialities for an adjourned meeting. Those are:

1. it is not a new meeting, but merely a continuation of the original meeting.

2. for an adjourned meeting no notice is required. Reg. 56, however, provides that when a meeting is adjourned for ten days or more, notice of the adjourned meeting shall be given as in the case of original meeting. But such a notice need not state the business to be transacted in that adjourned meeting.

3. no quorum is necessary. This means any number of attendants will form the quorum

4. an adjourned meeting can only discuss the items unresolved in the previous session. Not even the miscellaneous ones can be moved into, if that was not in the agenda of the original meeting.

Requisites of a valid meeting

The aim of a meeting is to pass resolution. And the resolutions will be valid and binding when the meeting itself is duly convened, notice served and conducted properly and as per provisions of the Act. The prerequisites of a valid meeting are: preparing notice, arraying specific agenda points, serving notice timely and properly, presence of quorum at the meeting, moving motions, seconding, voting, polling and adopting a resolution. Without observing these steps a meeting, with all good wishes apart, may stand void and without lawful effect.

Management of meetings

After all preparations are complete, it then remains as how to manage the actual meeting in the most befitting manner. A meeting starts when the notice for the meeting is read or taken as read. The fate of a meeting depends on how it is conducted with strict preservation of the limits of agenda. The aim of circulating notice with details of agenda well before the meeting is to allow the members to attend prepared. But when the directors representing company would expect the shareholder to follow the sequence of agenda, the directors should also have before them an ‘order of business’ to follow. The inauguration of the meeting, procedural steps, spelling out of the exact resolutions, maintaining meeting order etc. are all laid down in the order of business. The Secretary will prepare this order of business much earlier in consultation with the Chairman or the Managing Director. 1

A prudent management of the meeting depends largely on a good array of the things to be done one after another. The order of business of the meeting gives out the details of events that should follow in chronological order of agenda. It may even start from the events like inviting directors on the dais, recitation from the Holy Quran etc. It will spell out every successive happenings, for example, it may read like this “the Secretary will request the Chairman to formally start the - business of the meeting”, or “the Chairman will call the meeting to order and request the Secretary to read out the notice, when the notice is read the Chairman will proceed agenda-wise and read out the first agenda”. These, and subsequent lines, need to be paragraphed with successive para numbers for easy despatch by the Chairman at the meeting. The principal aim of preparing an ‘order of business’ before the meeting is to enable the Chairman get a clear and unconfused path of the meeting so that he or anybody conducting the meeting do not be at a loss at the meeting. A specimen of the order of business, in brief, may be seen at topic 218 in chapter VI.

Decorum in company meetings

Consequent upon the privatisation drive undertaken by government and following a short lasted boom during mid 80 * s’ , our capital market witnessed somewhat of a glut of share offers at that time. Many enterprises emerged in the market for capital generation and there was great enthusiasm among the quarters of both the investors and the stock traders. After various experimentations, however, the capital market has taken a shape and is in the process of consolidation.