There is often confusion about who can call general meetings of a company and in what circumstances. Both directors and shareholders have the right to call a company general meeting but the requirements and procedure are different in each case.
Directors
Under the Companies Act, directors can call a general meeting at any time by giving the correct type of notice to all relevant parties. The precise procedure by which directors can exercise this power is normally set out in the company's articles of association.
Shareholders
The shareholders of a company may also require the directors to call a general meeting but certain conditions must be met first. The members requesting the meeting must represent at least 5% of the company's paid up share capital or, if there is no paid up capital, 5% of the voting rights. The request must state the general nature of the business to be dealt with at the meeting and can be issued in hard copy or electronic form. The request may also include any resolution to be proposed at the company meeting.
If the directors receive a valid general meeting request from the shareholders, they are under a duty to call a meeting within 21 days. The meeting must then be held within 28 days of a notice of the general meeting being issued. If a resolution has been included in the shareholders' request for a general meeting, then notice of that resolution must also be given with notice of the meeting.
Failure to Call Meeting
If the directors do not call a general meeting when requested to do so by the shareholders, there are procedures that enable shareholders to go ahead and call it themselves. In certain circumstances some of the shareholders' costs in doing so may be are recoverable from the company.
Notices
Notices for general meetings must be sent to every member and director at least 14 days before the proposed meeting date or, in the case of public company annual general meetings, 21 days. A company's articles may specify longer notice periods. Shorter notices may be used if certain conditions are met. Notices may be given in hard copy form, electronically or via a website. If given via a website, there are further conditions that must also be met. The content of notices and other information published prior to a general meeting must also comply with specific provisions set out in the Companies Act 2006.
For more information on calling general meetings of a company under the Companies Act 2006 or to discuss any other company or commercial law matters, please contact Michael Czechyra via e-mail or by phone on 020 7611 4848.
