Agm And Egm Rules Under Uk Corporate Law
1. Annual General Meeting (AGM) Rules
Under the Companies Act 2006, AGMs are meetings of shareholders primarily held for communication, approval of accounts, appointment/reappointment of directors and auditors, and declaration of dividends. Key rules include:
Applicability:
Public companies must hold an AGM unless they qualify as “small companies” under section 382, which may be exempt.
Private companies are generally not required to hold AGMs.
Notice Requirements:
Section 307: 21 clear days’ notice must be given for AGMs.
Notice must specify date, time, venue, and general meeting business.
Agenda and Business:
Approval of financial statements and reports.
Appointment/reappointment of directors.
Appointment/reappointment of auditors.
Dividend declaration.
Quorum:
Typically two members for private companies; the Articles may specify for public companies.
Voting:
Voting can be on a show of hands or poll, depending on Articles or shareholder request.
2. Extraordinary General Meeting (EGM) Rules
EGMs are meetings called outside the normal AGM schedule for urgent or special matters, such as:
Approval of mergers or acquisitions.
Alteration of Articles of Association.
Share issues or capital restructuring.
Key rules:
Who Can Call:
Directors can call an EGM at any time.
Members holding at least 5% of voting rights can require directors to call an EGM (Section 303).
Notice Period:
Section 307: Minimum 14 clear days notice for private companies, 21 for public.
Agenda:
Must clearly state the special business to be discussed.
Only business stated in the notice may be transacted.
Quorum:
Depends on company Articles; usually two members for private companies, more for public.
Resolutions:
Ordinary resolution (simple majority) for routine matters.
Special resolution (75% majority) for significant decisions like amending Articles (Section 288).
3. Key UK Case Laws on AGM and EGM Rules
1. Foss v Harbottle (1843)
Principle: Minority shareholders cannot sue for wrongs done to the company; remedies usually lie through resolutions passed at general meetings.
2. Re Duomatic Ltd (1969)
Principle: Unanimous shareholder consent outside formal meetings can validate decisions as if passed in an AGM/EGM.
3. Gambotto v WPC Ltd (1995)
Confirmed that alterations to Articles require proper notice and special resolution to be valid.
4. Automatic Self-Cleansing Filter Syndicate Co Ltd v Cuninghame (1906)
Demonstrated the principle that directors must comply with Articles for calling meetings; shareholders cannot override procedural rules.
5. Ebrahimi v Westbourne Galleries Ltd (1973)
Highlighted that shareholder rights and expectations can influence meeting decisions, especially in quasi-partnerships.
6. Re Smith and Fawcett Ltd (1942)
Directors must act bona fide in the interests of the company, including when calling AGMs/EGMs or exercising voting rights.
7. Re Duomatic Ltd (1969)
Reinforces that shareholders’ unanimous consent outside meetings can validate actions normally reserved for formal meetings.
8. Andrews v Gas Meter Company (1897)
Confirmed quorum requirements and that failure to meet them renders resolutions invalid.
4. Practical Compliance Points
Ensure notice periods are strictly followed; failing to do so can invalidate resolutions.
Keep minutes of all meetings for legal and statutory compliance.
Special resolutions require 75% approval; ordinary resolutions require 50%.
EGMs are crucial for urgent or non-routine matters; misuse can result in shareholder disputes.
Members can require EGMs if the board refuses urgent action, safeguarding minority shareholder rights.
In summary, UK law under the Companies Act 2006 lays out clear rules for AGMs and EGMs, balancing director authority and shareholder participation. Case law further clarifies that procedural compliance, notice, quorum, and bona fide decision-making are essential for valid resolutions.
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