Division 6 of Part VII of the Companies Act 1997 sets out when shareholders must be brought together, and how the meeting is run.
Section 101 — the annual meeting
(a) once in each calendar year; and
(b) not later than six months after the balance date of the company; and
(c) not later than 15 months after the previous annual meeting.
All three constraints apply together. Section 101(2) relaxes the position for a new company: it need not hold its first annual meeting in the calendar year of incorporation, but shall hold that meeting within 18 months of incorporation. Under section 101(3) the Registrar may extend any of these periods on the company’s application for any special reason the Registrar thinks fit, even if the period is extended beyond the calendar year. And section 101(4) requires the meeting to be held on the date on which it is called to be held.
The reporting cycle is built around it. Under sections 209 to 212 the board must prepare an annual report and send it to shareholders not less than 21 days before the annual meeting, and under section 203 the auditor is entitled to attend and be heard. The balance date is fixed under section 176, and everything works back from it.
Section 103(5) provides an alternative: it is not necessary to hold an annual meeting where everything required to be done at it is done by written resolution.
Section 102 — special meetings
(a) may be called at any time by (i) the board, or (ii) a person authorised by the constitution to call it; and
(b) shall be called by the board on the written request of shareholders holding shares carrying together not less than 5% of the voting rights entitled to be exercised on the issue.
If the board fails to convene a special meeting within 21 days of receiving a request from holders of not less than 5 per cent of the voting rights, the shareholders may request the Court to order a meeting under section 104.
Every director who fails to comply with the request is liable for all costs associated with the Court application (s 102(3)), and every director who fails to comply with this section commits an offence, penalty as in section 413(4) (s 102(4)).
It makes the special meeting a genuine minority tool. A 5 per cent holder can force a meeting to consider, for example, an ordinary resolution to remove a director under section 134, or to question the management under section 90. The personal costs exposure in section 102(3) is a strong incentive for directors to comply.
Section 105 and Schedule 2 — how the meeting runs
The provisions of Schedule 2 govern proceedings at meetings of shareholders except to the extent that the constitution makes provision for the matters that are expressed in that Schedule to be subject to the constitution.
| Clause | Subject |
|---|---|
| 1 | Chairman |
| 2 | Notice of meetings |
| 3 | Methods of holding meetings — including by audio or audio-visual means |
| 4 | Quorum |
| 5 | Voting — show of hands and poll |
| 6 | Proxies |
| 7 | Minutes |
| 8 | Shareholder proposals |
| 9 | Corporations may act by representatives |
| 10 | Votes of joint holders |
| 11 | Loss of voting right where calls unpaid |
| 12 | Other proceedings |
The Schedule is a default code. Where a clause is expressed to be subject to the constitution, the constitution may vary it; where it is not, the Schedule governs. Note that section 90(2A) applies Schedule 2 in the same way to a meeting passing a management resolution.
Section 106 — fixing who is entitled
(a) where the board fixes a date, those registered on that date; and
(b) where it does not, those registered at the close of business on the day immediately preceding the day on which the notice is given.
(a) within one month of the date on which the meeting is to be held; and
(b) at least 14 days before the date of the meeting.
Section 106(1) applies the same technique to entitlement to distributions, to pre-emptive rights under section 45, and to any other right or benefit — the register on the date the board fixes, or on the day the board passes the resolution. Under section 106(2) a fixed date shall not precede by more than one month the date on which the proposed action will be taken. See ascertaining shareholders.
Running a meeting properly
- Fix the record date under section 106(3) and (4) if you need certainty about who receives notice.
- Give notice in accordance with Schedule 2 clause 2 and the constitution, setting out the text of any special resolution precisely.
- Send the annual report at least 21 days before an annual meeting.
- Check the quorum under Schedule 2 clause 4, excluding votes that are of no effect — shares the company holds in itself (s 57B) and shares held by a subsidiary in its parent (s 64(4)(b)).
- Allow management questions — section 90(1) obliges the chairman to.
- Take a poll where the vote is close or a special resolution is in issue: under section 37(1)(a) the statutory right is to one vote per share on a poll.
- Record minutes under Schedule 2 clause 7; they form part of the company records under section 164.
- Watch for buy-out rights. A section 91 or section 99 notice may follow within one month.
Sources
- Companies Act 1997 — ss 37, 45, 57B, 64, 90, 91, 99, 101–106, 134, 164, 176, 203, 209–212, 413; Schedule 2
Before relying on anything here, read the current text of the Companies Act 1997 and check for later amendments. If a decision matters to you, get advice — start with the Office of the Public Solicitor, or find a firm in the law firms directory.