This guide sets out best law and practice when holding a general meeting, including an annual general meeting (AGM) of a public company. A general meeting is a meeting of a company's shareholders (as opposed to a board meeting which involves only the company's directors).
Public companies must hold an AGM each year. There is no legal requirement for a private company to hold an AGM but the company's articles may require it to do so. A private company can pass resolutions of its shareholders either at a general meeting or by means of a written resolution. A public company cannot use the written resolution procedure and must pass all its shareholder resolutions at a general meeting.
A public company may see its AGM as an opportunity to showcase its annual performance and its intentions for the future. With a large number of shareholders and investors present the company will want to show itself in a positive light. But this requires careful and meticulous preparation before the meeting to ensure any potentially contentious or controversial matters do not adversely affect how the company appears to its shareholders.
It is often at an AGM that issues and disputes will most commonly emerge as the meeting is a forum in which shareholders are free and able to air their grievances and raise any concerns they may have about the running of the company.
Attending shareholders may contest a proposed resolution if they do not feel that it is in the best interests of the company. There may also be disputes about the appropriate procedure to be followed at the meeting. This guide looks at some commonly contested elements of a company meeting and provides practical advice on how a company can ensure a meeting runs smoothly.
Public companies which apply the UK Corporate Governance Code (the Code) are required to use general meetings to communicate with investors and to encourage their participation. They should therefore allow debate and questions at the meeting which should not be viewed simply as an opportunity for the board to deliver speeches to shareholders or to give pre-prepared answers to anticipated questions. Similarly, the QCA Corporate Governance Code (the QCA Code) requires a company to build trust by communicating and maintaining a dialogue with its shareholders.
Preparing the meeting
Notice of meeting
A general meeting is validly convened if a notice of the meeting has been given to all the shareholders who are entitled to receive notice. The notice must be clear, concise and comply with all the relevant legal and regulatory requirements.
The notice must state the date, time and place of the meeting and the general nature of the business which is to be conducted. Notice can be given in hard copy form or, provided certain conditions are met, electronically (for example by email, where shareholders have consented to receiving communications from the company in this way, or by details of the meeting being published on a website).
Failure to give notice to a person who is entitled to receive it will invalidate the meeting unless it can be proved that the omission was accidental.
If a special resolution is being proposed at the meeting, the notice must contain details, including the full text, of the resolution. It is common practice to include the text of any ordinary resolution, although there is no legal requirement to do this.
Explanatory notes in the notice of meeting will contain information relating to the administrative aspects of the meeting, such as how proxies may be appointed and how voting will be conducted. See later in the guide for more on proxies and voting.
The notice must be sent to all shareholders, the company's directors and the company's auditors as well as to anyone else entitled to receive notice under the company's articles.
Statutory notice periods differ depending on the nature of the company and the type of meeting being convened. The table below sets out the required notice periods, but the company's articles may specify that a longer notice period is required:
The notice period for a traded company's general meeting is 21 clear days. General meetings can be held on at least 14 (rather than 21) clear days' notice if the following conditions are satisfied:
- the meeting is not an AGM;
- the company allows shareholders to vote electronically in a way which is accessible to all relevant shareholders; and
- a special resolution reducing the notice period to not less than 14 days has been passed (either at the company's latest AGM held before the general meeting or at a general meeting held since that AGM).
Recent guidance issued by Institutional Shareholder Services recommended that companies should give as much notice as is practicable when calling a general meeting. The additional flexibility afforded by the ability to reduce the notice period should only be used in limited and time-sensitive circumstances where it would clearly be to the advantage of shareholders as a whole.
Meetings can be held on short notice if certain circumstances are satisfied but the general rule is that the meeting will be invalidated if the correct period of notice is not given to the relevant shareholders of the company.
||Other general meeting
||Not a traded company
||21 clear days
||14 clear days
||21 clear days (20 working days for companies subject to the Code)
||21 clear days (reduced to 14 days where certain conditions are met - see below)
||Not a traded company
||14 clear days
||14 clear days
||21 clear days
||21 clear days (reduced to 14 days where certain conditions are met - see below)
Deemed delivery of notice
The Companies Act 2006 (CA2006) contains rules on when documents are deemed delivered to the company's shareholders. When calculating the required period of notice, it is important that a company considers these statutory provisions, along with any deeming provisions which may be contained in the company's articles.
- by post - 48 hours after postage (to an address in the UK);
- by electronic means - 48 hours after it was sent; and
- on a website - when the material was first made available on the website or, if later, actual or deemed receipt of notice (by post or electronic means) of the fact that the material has been published.
CA2006 provides that any reference to 'days' means 'clear days'. This means that the day of the general meeting and the day the notice was sent are excluded when calculating the required length of the notice period.
Calculating notice periods
General meeting of a private company or a traded company which has approved 14 days' notice:
|By post or electronic means
|Notice of general meeting posted
||Friday 3 August 2018
|Notice deemed delivered
||Tuesday 7 August 2018
|14 days' notice required
||Up to Tuesday 21 August 2018
|Earliest date of meeting
||Wednesday 22 August 2018
AGM of a public company:
|By post or electronic means
|Notice of AGM posted
||Friday 3 August 2018
|Notice deemed delivered
||Tuesday 7 August 2018
|21 days' notice
||Up to Tuesday 28 August 2018
|Earliest date of meeting
||Wednesday 29 August 2018
Time, date and location
The company's directors will usually decide on the time, location and date of the general meeting, but when doing so they must ensure they exercise their discretion in good faith and in the best interests of the company. The chosen time and location of a meeting should be reasonably convenient to all the attending shareholders.
The Institute of Chartered Secretaries and Administrators (ICSA) recommends that the time, location and date of a meeting should be decided having regard to what is likely to be convenient to the shareholders generally. Many shareholders may also hold a portfolio of companies across different sectors so it is prudent to avoid holding the company's meeting on the same day as another company in the same, or similar, sector. Some shareholders may struggle to attend the general meetings of all the companies in their portfolio, particularly if they are held on the same day or in quick succession.
The meeting venue
The selected venue may prove too small or it may no longer be possible to use it as intended (due to damage or some other unforeseen circumstance) and a new venue may be required after notice of the meeting has already been sent to the shareholders. In this situation the meeting should be convened as normal at the original venue, the chair should formally adjourn it immediately before reconvening at a new venue a short time later. See later in this guide for more on adjourning a general meeting.
To ensure all shareholders are kept onside, they should be informed in advance of the adjournment in writing. It is also recommended that the company publishes an advertisement in a national newspaper and features the change of venue on the investor page of its website. This is so that as many shareholders as possible are made aware of the last minute venue change.
By following these steps the chair is able to establish the minimum quorum required to formally commence the original meeting. The majority of the shareholders will then not be required to make the journey to the first venue and can arrive at the new venue in time for the reconvened meeting. This leads to less disruption being caused to the reconvened meeting. If shareholders arrive feeling disgruntled this could impact on the success of the meeting.
Size of venue
Using a venue which is too small for the number of shareholders in attendance is likely to become problematic when trying to run and manage the meeting. It would be preferable for the company to book a venue which is larger than necessary so that there will be no difficulty accommodating all the shareholders.
On the other hand, booking a larger venue than is necessary can also lead to problems, including audio-visual problems. Will the chair be visible to all the shareholders? Will all the shareholders be able to hear the chair? These concerns can be dealt with by meticulously checking all audio-visual equipment before the meeting is convened and by making sure that the chair is able to use sufficient volume for the whole room to hear what is being communicated, or continue to hear in the event of a noisy protest.
A larger venue may require speaking-points to be set up or the use of a roving microphone to ensure that any shareholders who wish to speak up or ask a question can be heard by all the other shareholders in attendance, as well as the chair.
The chair should have the power to remove individuals who refuse to leave a speaking-point or give up a roving microphone. As with all of the chair's powers, however, this must be exercised properly and a good degree of discretion should be used before resorting to this. See later in this guide for more on the powers of the chair.
Layout of the venue
The layout of the venue will assist in ensuring that the chair can be seen and heard by all the shareholders. A longer, narrow venue is more beneficial as the chair will find it easier to address the group.
But having wider aisles can be important for security purposes should anybody need to be forcefully removed from the meeting with minimal disruption. To prevent any protests the front of the venue, where the chair is likely to be situated, should be reserved for security personnel to reduce the risk of the stage being 'stormed' by disgruntled shareholders or protestors.
Having security present inside the meeting venue may help to maintain order at the meeting. It is recommended that a company hires its own security personnel or security firm rather than having police present as such an extreme measure is likely to make the shareholders feel uncomfortable.
The security measures put in place should make the shareholders feel at ease and help the meeting to flow smoothly. The chosen venue may have security readily available which could be utilised on the day of the meeting.
To ensure only shareholders are present and that no unauthorised access to the venue takes place, searches or identification procedures may be undertaken. Invasive searches of shareholders are not advised. Shareholders should be told in advance to bring identification with them so that they can be easily identified as a genuine shareholder entitled to attend the meeting. It is important that individuals are not improperly refused entry which could invalidate the meeting.
Some companies adopt articles which contain stronger provisions to allow for greater security at general meetings, especially where there is a history of unruly behaviour. For example, some companies may be more prone to angry protests than others, owing to the nature of the particular business sector. Including any specific security measures or requirements in the notice of meeting will ensure shareholders are aware of the requirements and can come prepared with any identification documents. It should also act as a deterrent to bringing any items to the meeting with a view to starting a protest or causing disruption.
The chair of the meeting has the final say on whether individuals carrying what could be considered an offensive weapon can attend or not. The chair must ensure that the meeting is conducted in good order so if a search turns up a weapon being carried by an individual, the chair should be informed and then make the final decision as to how the individual should be dealt with.
It is difficult for companies to establish a policy on the admittance of audio and visual recording equipment at a general meeting because modern mobile phones come with the ability to record video footage and take photographs. It is unlikely that shareholders will be happy leaving their mobile phones outside of the meeting venue, particularly as many may be heavily reliant on them.
The chair is entitled to refuse admission of mobile recording devices to protect good order of the meeting, but this is only a viable option if they are likely to disrupt the meeting. The press or media may also be in attendance at the meeting which will make it difficult to force shareholders to leave their devices outside the venue when the press will be using similar devices to follow or record the meeting.
If a policy on the admittance of mobile devices is to be implemented this should be made clear in the notice of meeting so that shareholders are aware of the requirements beforehand.
Power to exclude or permit attendance
Unless specifically included in the company's articles, a shareholder cannot be refused entry to a general meeting even if they refuse to comply with a simple obligation, such as a search.
The conditions of any contract entered into by the company for the use of the venue will not override a shareholder's right to attend the meeting. So if a requirement of the venue provider is that all individuals are searched before entry and an individual refuses to be searched, the venue provider may prevent that individual from entering, but they will still have a right to attend the meeting. This causes tension between the company and the venue provider which could, in extreme circumstances, affect the meeting.
Excluding entry to an individual who is entitled to vote could lead to the meeting being invalid.
The company's articles of association will generally give the chair the ability to permit non-members to attend the meeting. However, if it is likely that the presence of non-members will be challenged, it is sensible for the chair to refer expressly at the outset to the fact that there are a number of people who are not strictly entitled to be there and to ask whether there are any objections to their presence. Whilst it has become routine to permit members of the press to attend public company AGMs, the use of cameras should be discouraged: an orderly, well run meeting is unlikely to be newsworthy; but short clips of disorder at a particularly unruly meeting could be given undue prominence and not reflect the overall impression of the meeting.
Conduct of the Meeting
Starting the meeting
It may not be possible for every shareholder to arrive on time for the start of the meeting so the chair will need to decide whether to start the meeting at the time designated in the notice or wait until everybody is present at the venue.
Legally, if a quorum is present inside the venue, the meeting should be started on time. This requirement goes hand in hand the chair's duty to ensure the meeting is run in an orderly manner. The chair should act reasonably to ensure individuals who are in a position to attend, for example, in a queue outside the venue, are present before the meeting is commenced. A late surge of individuals entering the venue could cause problems and impact on the orderly manner of the meeting.
Any delay to the start of the meeting will be unwanted and the best course of action would be to open the meeting but delay discussion of any formal business until a larger number of shareholders are present.
The company should ensure shareholders have a simple and straightforward journey to the meeting, from initial registration, through security and in the main venue. The simple things can be important, such as the location of toilets, which should be positioned inside the venue to prevent re-admission of shareholders, and the location of entrances and exits. Ensuring shareholders know how to move around the venue easily will help prevent any disruption.
Reports and accounts
At potentially difficult meetings the order of business could be crucial to ensuring it is conducted properly.
The point at which an AGM deals with the company's reports and accounts can be a contentious moment as shareholders query and question the company's financial position. Considering the accounts and reports at the beginning of the meeting allows the negative atmosphere produced as a result to mellow the longer the meeting continues. Lingering negative tension for the duration of the meeting can affect other business which the chair will want to consider at a later point in proceedings.
It would be unusual for the reports and accounts of a company to be considered anywhere other than at the start of a meeting, but it would be possible to list these as one of the final items for consideration at the meeting. However, a well-run and well-managed meeting will not require this and the chair may be able to encourage open discussion on the issues and settle the mood as the meeting advances. This strategy helps to limit disruption to the conduct of the meeting as the shareholders may be used to the timetable of previous meetings.
Alternatively, the chair could release the accounts and reports to the shareholders for consideration at the meeting but make it clear that any discussion and debate on those reports and accounts will take place at the end of the meeting. This prevents any controversial issues from causing disruption at the meeting.
The Role and Powers of the Chair
Appointing a chair
Most public companies will already have a chair of the board of directors who will chair any general meeting.
For private company meetings, a shareholder may be appointed as chair, subject to the company's articles of association. Usually, if the directors have appointed a chair of the board, that person will chair the shareholders' meeting if they are present and willing to do so. If the appointed individual is not present at the meeting, the directors present at the meeting, or if no directors are present the meeting as a whole, must appoint a director or shareholder to be the chair.
The company's articles may contain provisions restricting who may or may not be appointed as chair. If a chair has not already been appointed, the first item of business on the meeting's agenda should be the appointment of the chair who will then run the meeting.
The chair should be briefed in advance on the role and on the powers at his/her disposal. Any key provisions in the company's articles of association governing the procedures to be followed at the meeting should also be brought to the chair's attention. A script should be prepared outlining opening and closing statements along with a summary of the resolutions being proposed at the meeting and the surrounding procedure for actually proposing and, hopefully, passing those resolutions.
Duties of the chair
The chair has a number of duties which are owed to the meeting and not, for example, to the board of directors or any individual shareholder (such as a majority shareholder).
The chair must act impartially and ensure that order is maintained for the duration of the meeting. The chair must ensure that business is conducted in an efficient manner and in accordance with the law and the company's articles.
Opinions of shareholders must be given a fair hearing and the responses to questions posed at the meeting must be recorded accurately. The chair must accept all legitimate resolutions and amendments, and ascertain the views of the shareholders on the matters being considered.
Powers of the chair
To help discharge the duties referred to above, the chair is given a number of powers, including the power to:
• Regulate the course of proceedings.
• Make rulings on a point of order.
• Close the discussion and move to a vote with the consent of the meeting.
• Rule on the validity of and declare the results of a vote.
• Adjourn the meeting.
• Demand a poll and make arrangements for demanding a poll.
• Receive and reject proxies.
• Declare the result of a vote.
Companies with a history of disruptive or disorderly meetings may wish to give the chair greater powers by including express provisions in their articles of association. These provisions could empower the chair to take any action considered suitable to promote orderly conduct at the meeting and provide that any decision made by the chair on procedural matters will be final and binding on the meeting and the shareholders in attendance.
A chair will not be given free rein over a meeting and restraint will still need to be exercised as the proceedings are managed. A chair cannot close a meeting without allowing everybody who may wish to speak to do so and the chair cannot reject any special or ordinary resolutions which have been properly proposed at the meeting.
In these situations the shareholders are well within their rights to continue with the meeting as it has not been properly closed or managed and it is possible that the part of the meeting over which the chair took control could be declared void.
Speaking at a meeting
The general rule is that all shareholders are entitled to speak at a general meeting, but this right may be limited in different ways by the company's articles of association and, in particular, by the rights attached to different classes of shares.
Unless specifically dealt with in the company's articles, the right to speak at a meeting will be limited if a shareholder's voting rights are also restricted. Rights such as these can be clarified in the company's articles to prevent any arguments about the rights of a shareholder from arising.
The chair and any director will be entitled to speak at the meeting. The Code also requires the chairs of the audit, remuneration and nomination committees to be available at the AGM to answer questions. The company's auditors can also speak on any matters which concern them in their position as auditors.
Speaking at a large and potentially contentious meeting can make anybody anxious, no matter their seniority. This anxiety is magnified in the context of an AGM. The chair, along with anybody else required to address the meeting, will be under the scrutiny of the board and investors and will have to deal with questions from potentially unhappy shareholders. It is therefore advantageous for the chair to rehearse a script before the meeting to help alleviate some of the unavoidable stress of running and managing the meeting.
Many chairs, and other senior executives, will choose not to rehearse, perhaps because of their busy schedules or because they feel it is unnecessary. But a rehearsal will allow the venue to be tested (as mentioned there may be audio-visual equipment which needs testing to ensure it does not cause any problems once the meeting is underway). A rehearsal also allows the chair to prepare answers to some of the more probing questions. Performing a test of the voting process which is to be followed at the official meeting will also help it to go smoothly on the day.
A rehearsal is an opportunity for the minor details to be ironed out and finalised which, if not discussed, can be unnerving and upset the flow of the meeting.
Depending on the size of the venue, it may be necessary to set up microphones around the room for use by all speakers (or one roving microphone for use by all speakers). The chair should aim to take questions equally from around the venue so that it appears all shareholders are being given an equal opportunity to speak.
Debate and Discussion
The chair must allow for debate and discussion relevant to the resolutions or business being discussed at the meeting. It is common for companies to ask for questions to be submitted in writing before the meeting, so that they have sufficient time to put together an answer. However, this does not prevent shareholders from asking questions at the meeting itself.
When the reports and accounts are being put before the company's shareholders, it may be tempting for the chair to decline questions on related resolutions so as to avoid the possible disruption that may arise. But doing this would go beyond the scope of the chair's powers at the meeting as the shareholders are entitled to debate the business activities of the company in the context of the resolution being considered, in this case the consideration of the reports and accounts.
However, the chair is able to set out an order in which questions are to be taken and any probing or potentially awkward questions can be taken at the end of the meeting.
How questions are managed and fielded is an important aspect of a meeting which will often be overlooked. This should be a key consideration due to its unscripted and potentially contentious nature. Questions could be asked through fixed question points, roving microphones, dial-in telephone or webcam so ensuring all these possibilities are covered allows for a smooth Q&A process.
Having a roving microphone accessible at the meeting is essential, so that every shareholder has the chance to speak or ask a question. There may also be other accessibility considerations such as the need to provide a sign language interpreter. A general meeting must not exclude anybody and it should be a productive, inclusive and pleasant experience for all those in attendance.
Grouping questions into topics can be beneficial and will give the meeting more structure. It also gives the chair a heads up as to what to expect next so that he/she is not taken by surprise.
The chair can also limit debate by:
- not replying: the chair is not obliged to answer a question if he/she does not consider it to be in the best interests of the company. The chair must weigh this against the possible consequences of a refusal to answer. For example, it could alienate the shareholders and/or lead to further dissent at the meeting;
- limiting the right to speak: there may be a large number of shareholders present who wish to speak. The chair is entitled to limit each shareholder to one opportunity to speak on a particular motion or he/she may limit the time allotted to an individual shareholder. The chair must exercise discretion in an impartial manner but if strictly necessary he/she may waive a shareholder's right to speak altogether;
- requiring debate at the same time: the chair is entitled to deal with all questions on a topic at one time and then refuse further questions on the same topic later on; and/or
- ending the discussion: debate can be stopped once the chair is satisfied that it has been covered sufficiently and that a fair cross-section of shareholders' views has been obtained. This right to stop the discussion must be exercised carefully by the chair so that genuine debate is not stifled or the views of minorities not heard. It is possible that the shareholders will get bored if a particular discussion goes on for too long and they may make it clear to the chair that they want the discussion to be stopped.
In particularly contentious cases, a shareholder may propose a vote of no confidence in the chair and/or the board. Generally, a resolution proposed at a meeting which is not set out in the notice of the meeting should be ruled out of order but it is arguable that a vote of no confidence would come within the scope of an AGM. In any event, market practice generally makes an exception for a vote of no confidence. However, a vote of no confidence is symbolic only and of no legal effect so the chair may wish to explain this to the shareholder before asking for the motion to be withdrawn to avoid wasting time considering a resolution which will achieve nothing. If the shareholder persists, the resolution could be put to the meeting but the result will be of no effect.
Points of order
The chair's decision on a point of order is final, but others present at the meeting should be given an opportunity to speak on the matter.
Points of order relate to compliance with the rules governing the conduct of the meeting or any problems with the procedure being followed. This can include any breach of the company’s articles or related statutory requirements, any procedural defects such as an insufficient quorum or an objection to the use of offensive language.
If significant disruption is expected at the meeting then measures should be implemented to minimise the impact. The chair should consider possible disruptive scenarios and how these will be dealt with at the meeting. Rehearsing answers to potentially tricky questions will also help the chair 'hold their own' when shareholders query a particular resolution or request further information which the chair may not have to hand.
One of the main duties of a chair is to ensure that order is maintained at the meeting and he/she should avoid any confrontation with those shareholders who may not necessarily be on-side. If the chair comes across as polite and reasonable he/she is likely to receive more support from the wider shareholder group, particularly where one shareholder is taunting or provoking the chair.
If the company is aware of a particular group of individuals who may have specific concerns about the company's activities, it may be worthwhile offering them an opportunity to discuss this away from the meeting so they can share concerns with the relevant directors of the company. This is a tactic to prevent the group from causing a scene and disrupting the meeting. But this approach should only be adopted where the issue is not one which is being covered at the meeting otherwise the shareholders will be reluctant to take up the offer and will likely want to air their grievances in a forum at which all other interested parties are present.
The company must also be careful that this prior meeting does not constitute another general meeting, requiring the more onerous legal formalities.
Another tactic available to a chair dealing with disruption is to adjourn the meeting until the commotion has calmed down. However, the consent of the meeting may be required for this adjournment to be effective. See later in this guide for more on adjournments.
The chair is entitled to expel any individual who may be preventing the progress of the meeting by disorderly conduct of a serious nature. This stems from the chair's duty to preserve good order and to ensure that the meeting is conducted in a proper manner. However, expulsion from the meeting should be a last resort and should only be considered when all other options have been exhausted. Any expulsion should involve the minimum amount of force required to remove the shareholder from the venue. See earlier in the guide for how the layout of the venue and any additional security measures can assist companies in dealing with unruly shareholders.
Dealing with any demonstrators in stages ensures the chair retains the support of the meeting as he/she will be acting reasonably in giving the individual an opportunity to calm down before expelling them. Being able to show support of other shareholders, such as by a show of hands, will demonstrate to the chair that it is right to eject the individuals. If the demonstrators are not receiving any support from others at the meeting they may leave of their own accord without the need for force.
If disruptions are expected it may be worth reducing the length of the meeting. When drafting the notice of meeting, thought could be given to combining two or more resolutions to reduce the overall number coming before the meeting.
The company must be careful when adopting this approach as resolutions combined together have been held not to be properly carried and therefore are potentially void. Combining resolutions for the purposes of a poll is permitted, so long as the meeting agrees to this beforehand.
Combining resolutions should be avoided by companies applying the Code as this requires a separate resolution to be proposed on each substantially separate issue.
The purpose of any company meeting will be the consideration of a number of resolutions. These can be special resolutions or ordinary resolutions, each of which can only be passed if they satisfy the required formalities.
Generally, a special resolution cannot be amended. The notice of meeting must include the text of the resolution and specify an intention to propose the resolution as a special resolution. The resolution must be the resolution actually passed at the meeting and significant amendments cannot be made to the version of the special resolution sent with the notice of meeting.
However there are some limited exceptions to this rule and if an amended resolution is challenged the courts will look to adopt a common sense approach. Any changes made to correct a typographical error or, for example, to reflect changes in the company's share capital since the circulation of the notice of meeting, will be permitted. The court will compare the special resolution passed at the meeting with the one circulated in advance to ascertain how substantial the amendments were.
An ordinary resolution can be amended at a general meeting and, when deciding whether or not to accept an amendment, the chair should tread carefully in order to avoid any legal challenge. The chair must act in good faith and in the interests of the meeting and of those present at all times when exercising the discretion to permit (or reject) an amendment.
Any amendments made to ordinary resolutions must be within the scope of the notice of meeting relating to the resolution. Even if the notice includes the full text of an ordinary resolution, the meeting will not be prevented from considering any other business which falls within the general scope of the notice.
This general scope would be determined by reference to a reasonable shareholder and whether they would consider the business conducted at the meeting to fall within this scope. Amendments should not be made if they are likely to affect the decision of a shareholder to attend the meeting, as these will fall outside the general scope of the meeting.
A resolution cannot be amended if it results in a greater burden being imposed on the company. In addition, the amendment must not invalidate the original resolution.
The chair is entitled to reject a proposed amendment if it:
- seeks to reopen business already completed at the meeting;
- is inconsistent with a previous decision of the meeting; or
- is obstructive, vexatious or irrelevant (this can be difficult to prove).
A company's articles may help to minimise uncertainty if they contain provisions allowing more time to consider proposed amendments. For example the company may be entitled to request 48 hours' notice if an amendment is proposed to a resolution contained in the notice of meeting.
If the chair refuses to submit an amendment to the meeting, and this decision is made in an improper manner, the resolution passed at that meeting will be invalid. The company's articles can again help to reduce the risk to the company by stating that if the chair, acting in error but in good faith, does not permit an amendment then this will not lead to the resolution being invalid.
Any proposed amendment to a resolution must be voted on before the original motion can be presented at the meeting. If the amendment is approved, the motion must be put again featuring the amendment. It is therefore possible for the amendment to be approved but for the amended resolution not to be passed at the meeting.
At a general meeting, any vote on a resolution must be decided on a show of hands, unless a poll is required by, or demanded in accordance with, the company's articles.
It is important that the chair is familiar with the voting process before the meeting, particularly if a vote is to be conducted by way of a poll. The company secretary will ascertain the number of proxies lodged and calculate a breakdown of the votes. This is important where the chair has been appointed proxy by more than one shareholder as the chair will need to know the number of votes to cast for and against the resolutions.
The articles of the company will usually specify that all holders of fully paid up shares are entitled to vote and they will each have one vote on a show of hands and one vote per share on a poll.
Proxies present at the meeting and properly appointed by a shareholder are entitled to vote. If a proxy is appointed by more than one shareholder to vote in a different way then, on a show of hands, the proxy will have one vote for and one vote against the resolution.
Companies will often automatically conduct all voting by way of a poll, but even if not, a poll could be demanded at the meeting and so the chair must be familiar with the correct procedure.
Broadly, a poll can be demanded by:
- five or more shareholders with a right to vote on the resolution;
- shareholders holding 10% or more of the total voting rights of all the shareholders with a right to vote at a meeting; or
- shareholders holding voting shares on which an aggregate sum has been paid up equal to more than 10% of the total sum paid up on all voting shares.
However, a company's articles may give shareholders more generous rights, for example, they may allow any shareholder to demand a poll on their own or may permit fewer than five shareholders to demand a poll. In addition, articles often allow the chair demand a poll.
If a poll is demanded by following the correct procedure, any refusal of the chair to take it will result in resolutions passed on a show of hands being invalid.
Typically, the articles will allow a poll to be demanded on a resolution either before a show of hands on that resolution or immediately after the result of a show of hands on that resolution is confirmed and announced to the meeting. A poll may also be capable of being demanded in advance of the meeting.
The procedure for taking the poll should be set out before the meeting. Giving every shareholder a voting card on arrival at the venue will help to avoid any unnecessary interruptions and delays in obtaining approval of the resolutions.
The poll can be taken in writing, using individual voting cards, or in electronic form. Technological developments have led to an increase in electronic polls and voting which can be useful in providing quick and accurate results as the number and split of votes can be calculated instantly. Any shareholder who may struggle to use the more advanced methods of voting should be given the opportunity to vote in the traditional manner and this should not slow the voting process down.
The chair should appoint 'scrutineers' (usually the company's registrars or auditors) to oversee the taking of a poll. Even if this is not required by the company's articles, doing so should improve the accuracy of results and ensure the voting procedure is conducted correctly and legally.
The scrutineers will decide on the procedure for issuing voting cards, counting votes and checking these against any proxy forms which have been lodged before the meeting. The votes must also be checked against the register of shareholders, the most up to date version of which must be available at the meeting.
The chair should specify a time for closing the poll. If this is not done the poll cannot be closed if votes are still coming through. The chair would be required to wait for a reasonable time after the votes have stopped coming in before closing the poll. Following the poll the chair should make it clear when the result is to be announced: this could be at the meeting itself or later in a newspaper or other publication, such as the company's website.
The chair is able to announce a pending result, stating that it is subject to final clarification.
Results of voting on a show of hands
Unless a vote on a show of hands produces a very obvious result, votes should be counted by the chair (with assistance from the scrutineers, if these have been appointed). The result of the vote should be declared by the chair and this is conclusive evidence, without the need for any proof of the number of votes in favour or against the resolution.
Where the result on a show of hands is particularly close or inconclusive, the chair should demand a poll in order to comply with the duty to ascertain the view of the shareholders.
Results of voting on a poll
If voting is conducted on handheld or electronic devices the results should be announced after each resolution has been dealt with or the chair should ensure that the result is displayed on a screen which is visible to everyone in the venue. In both of these situations, it should be made clear that the results are provisional pending a final check and the confirmed results should be announced and published on the company's website shortly after the meeting.
Significant votes against a resolution
If, in the board's opinion, a significant number of votes have been cast against a resolution, both the Code and the QCA Code require the company to explain, when announcing the results, the steps it intends to take to understand the reasons behind that vote and how it intends to rectify any issues within the shareholder group. A vote of more than 20% against a resolution is considered to represent significant dissent.
A register published by the Investment Association names each FTSE All-Share company which has received more than 20% of votes against any resolution proposed at its AGM.
Any shareholder who is entitled to attend and vote at a meeting is entitled to appoint a proxy to attend and vote on his/her behalf. A shareholder can appoint more than one proxy if each proxy is appointed to exercise voting rights over different classes of share.
Subject to any provisions in the company's articles, a properly appointed proxy will count towards the meeting's quorum and will remain in place if a meeting is adjourned. A proxy also has the power to demand, or join in demanding, a poll.
A proxy must follow the instructions of the appointing shareholder when casting a vote. But, in the absence of a contractual obligation or a form of fiduciary relationship, it does not appear that a proxy is obliged to use the votes he/she has been given.
The Code requires proxy appointment forms to allow shareholders to direct their proxy to vote either for or against each resolution or to withhold their vote. However, the form must also explain that a 'vote withheld' is not a vote at law and will not be counted when calculating the number of votes for or against a resolution.
Adjourning a Meeting
A chair has a limited inherent power to adjourn a meeting, which can be exercised when:
- there is violence, or the threat of violence, at the meeting;
- a poll is required and this cannot be taken unless the meeting is adjourned; or
- somebody at the meeting falls ill and requires medical attention.
The aim of this inherent power is to facilitate the presence of those entitled to debate and vote at a meeting where such debate and voting is possible. In other words, if something were to happen which would result in an eligible shareholder not being able to vote at the meeting, an adjournment may be an appropriate course of action.
The chair will generally also have the power to adjourn a meeting in certain circumstances set out in the articles of association.
The meeting must be adjourned by the chair if:
- a quorum is not present at the start or at any point during the meeting; or
- the meeting requests that the meeting be adjourned.
The chair may also adjourn the meeting with the consent of the meeting by way of ordinary resolution or if, in the chair's opinion, it is not practical to obtain this consent but it appears necessary to adjourn the meeting to better facilitate the business being conducted.
If the consent of the meeting is not obtained, and an adjournment is deemed to be necessary to re-establish order or to facilitate conduct of the meeting, the adjournment should only be for a period which is reasonably necessary to restore order.
The chair should make clear the time and place of the adjourned meeting or make it clear that the time and place will be decided by the directors and the shareholders notified in due course.
The articles may require notice of the adjourned meeting to be given but this is usually only necessary where there is a long delay between the original meeting and the adjourned meeting.
All the requirements of the original meeting must be satisfied at the adjourned meeting otherwise the adjourned meeting will be invalid and this will also be the case where new business is transacted which could not have been transacted at the original meeting.
All proxies will remain valid for the adjourned meeting and those shareholders who did not attend the original meeting are able to attend the adjourned meeting.
Following a general meeting there are a number of formalities which must be completed by the company.
Minutes of the meeting will need to be prepared and signed by the chair. Whilst the minutes do not need to record everything that was asked or said at the meeting, they do need to contain enough information to enable a shareholder not present at the meeting to understand what was decided. Once signed, the minutes provide conclusive proof of the proceedings at the meeting. The minutes must be kept for at least ten years.
Any special resolutions, and certain ordinary resolutions, passed at the meeting will need to be filed at Companies House together with any relevant statutory forms recording the business transacted at the meeting (for example recording the resignation or appointment of a director).
There may also be amendments required to the company's statutory books. For example if a new director has been appointed, the register of directors will need to be updated.
Traded companies must publish the results of any poll on their website after the meeting. They may also need to make a market announcement of the results.
As noted earlier, if there was significant shareholder dissent on any resolution, the company must consider the reasons for this and what steps it intends to take in order to deal with the negative votes.
Timetable for AGM2
||Last date for shareholders to submit request requiring circulation of resolutions for AGM
||Shareholders holding 5% of voting rights or 100 shareholders holding shares with average paid up sum of £100 per shareholder may require company to include a resolution in the AGM notice
||Last date for posting AGM notice
||Notice to be sent to all shareholders and directors, plus the auditors
|Information about shares, voting rights and matters set out in AGM notice to be published on website
||Companies on the Official List. Information must be published on or before notice of the meeting being given
||Notice deemed served
||Notice served 48 hours after posting. Non-working days are excluded when calculating the 48 hour period
||Start of 21 clear day period
Non-working days are included in calculating the 21 day period
For companies which follow the UK Corporate Governance Code, notice period must be at least 20 working days
||Last time for receipt of proxy appointments
||Articles may provide a shorter period (eg 24 hours) before the meeting by which proxy forms may be received
||Last day of 21 clear day period
|M: DAY OF MEETING
||Public company must hold AGM within 6 months of year end.
Companies on the Official List must hold AGM within 4 months of year end.
|Asap post meeting
||To be signed by chair
|Asap post meeting
||Send copies of resolutions (other than general business) to FCA for publication
||Companies on Official List
|Asap post meeting
||Companies on Official List: announcement includes board changes, resolutions passed, details of votes on show of hands or on a poll
Companies on AIM: board changes
|Asap post meeting
||Publish results of votes on show of hands on website
||Companies which apply the UK Corporate Governance Code
|Asap post meeting
|Disclose reasons for any resolution receiving >20% negative vote and steps which company proposes to take to address shareholders' concerns
||Companies which apply the UK Corporate Governance Code or the QCA Corporate Governance Code
|Asap post meeting
|Update statutory books
||For example, record resignations or appointments of directors in the Register of Directors
||Last day by which any relevant resolutions passed at the meeting must be filed
||All special resolutions, and certain ordinary resolutions (eg a directors' authority to allot shares) must be filed at Companies House. Amended articles of association must also be filed if relevant
|Up to M+30
||Period within which relevant statutory forms may need to be filed
||Depending on the business transacted at the meeting, prescribed forms may need to be filed at Companies House to record or effect certain matters (eg the appointment of a director, the allotment of shares, etc). The filing period varies for different matters
||Last day to publish results of poll on website
||Companies on Official List must published results asap but within 16 days
|Within 6 months of financial year end
||File report and accounts
||Companies on Official List must file within 4 months
||Period for which minutes of meeting must be kept
||Minutes must be open to inspection by any shareholder