January 31, 2022
January 31, 2022
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4.1 - 58 votes
A company is a separate legal entity that is formed by two or more persons to operate a commercial enterprise. A company is made up of directors and members who see to the management and organization of the company. As an artificial entity, a company thrives on decisions made by its members and directors, and before valid decisions can be made, a meeting must be duly convened.
Meetings are convened to keep the members of the company informed about the operations of the company and to make strategic plans that will enable the company to achieve its objectives. In other words, meetings remain an avenue for facilitating the decision-making process of a company. This article will explain the various forms of company meetings and the features of a valid meeting.
Also referred to as Board Meeting, this meeting is convened and organized by the directors of a company to discuss and deliberate on issues concerning the management and organization of the company.
Members of the company are usually exempted from this type of meeting, except such member is also a director of the company or the expertise of the member is required. This meeting can be convened at any time and at any place provided that the other participants of the meeting are adequately notified.
This type of meeting is convened to discuss and deliberate on matters affecting the members and the management of the company. The meeting of the members of the company is also referred to as General Meeting.
According to the Companies and Allied Matters Act, 2020 (CAMA), the types of general meetings that can be convened are:
This is a type of meeting that is convened by public companies within six months of incorporation. The purpose of the meeting is to consider and discuss matters arising from the company's statutory report and any issue relating to the formation of the company and its commencement of business. The directors are mandated to at least 21 days before the statutory meeting, send the statutory report to every member of the company, and also deliver a copy to the Corporate Affairs Commission for registration. The statutory report contains the following information:
This is the type of meeting that is convened once every year. The law provides that the first annual general meeting should be held within 18 months from the date incorporation.
The ordinary businesses conducted at annual general meetings are the declaration of dividends; presentation of financial statements and reports of directors and auditors; the election of directors in place of those retiring; the appointment and fixing of remuneration of auditors; and the disclosure of remuneration of managers of a company.
This meeting may be convened at any time and when the need arises. They can be organized by the board of directors or any member or members of the company holding not less than one-tenth of the company's paid-up capital or voting rights.
For any meeting to be valid, adequate notice must be given to persons who are entitled to attend the meeting. The important issues are as follows:
- Length of Notice. For general meetings, the law states that 21 days' notice should be issued to all persons entitled to the meeting. However, shorter notice may be given if: For general meetings, all the members agree to it; and for statutory and extraordinary general meetings, the members with 95% of the total voting rights agree to the shorter notice. One way to secure the consent of the members for shorter notice is by ensuring that the members sign a Waiver Letter.
- Content of notice. Every notice of a company meeting should state the date, place, time of the meeting, and the agenda of the meeting. In addition to this, a notice of a general meeting should also contain a statement that a member has the right to appoint a proxy to attend the meeting to vote on the member's behalf. Proxies are usually appointed by a Proxy Form.
- Persons entitled to attend general meetings. For board meetings, all the directors of a company are entitled to notice of the board meeting. For general meetings, the members of the company or their proxies, creditors of the company, the corporate affairs commission, and other relevant stakeholders are entitled to a notice of meeting.
The Notice of Meeting should give adequate and full disclosure of matters that will be voted upon, otherwise, resolutions passed at the meeting will be invalid.
The CAMA expressly states that all statutory and annual general meetings must be held in Nigeria. These meetings may be held in any part of Nigeria and not necessarily at the company's business address. This means that holding these meetings in any place other than within Nigeria may invalidate such meetings. Also, according to the new CAMA, 2020, private companies can hold their general meetings virtually. However, this does not apply to public companies.
A quorum is the minimum number of persons that should be present to conduct businesses and make valid decisions at a meeting. This is determined by the Articles of Association of a company or the rules of an organization. For example, if a company's Articles states that the quorum for a board meeting is three directors, it means that if all the directors have been duly notified of the meeting and only three directors attend the meeting, the meeting can commence, and decisions can be validly made at the meeting. Conversely, if only two directors attend the meeting, the meeting will be invalid.
This describes how decisions or resolutions are passed at meetings. For a Resolution to be duly passed, the participants of the meeting are required to put the issues for discussion to vote, and the method of voting is determined by the company's articles. For example, if the articles of a company state that all matters in a board meeting may be decided by a majority vote, this means that the requirement for passing a resolution at a board meeting is a vote of the majority (51%) of the directors that are present at the meeting. Failure to make decisions according to the provisions of a company's Articles or the company rules invalidates any decision or resolution passed at such meeting.
This is a record of all the proceedings made at any meeting. The minutes of meeting is a record of all salient issues, matters, discussions, and deliberations made in a meeting. It includes the agenda of the meeting, the decisions made, tasks or actions to be taken, and it should be signed by the chairman and secretary of the company.
The Minutes book is proof that a meeting was duly convened. Hence, every company is required to keep a record of proceedings and decisions taken at all board meetings, board committee meetings, or general meetings in the Minutes of the meeting.
Vivian Umelue is an attorney and legal templates programmer at Wonder.Legal and is based in Nigeria.