General meetings:

A general meeting is a meeting of the members of a limited company. This type of meeting is more formal than a board meeting of directors, because the calling and conduct of general meetings is regulated by the Companies Act 2006. Private limited companies are no longer legally required to hold Annual General Meetings (AGM) unless a provision to the contrary is included in the articles. Most private companies will only call general meetings when extraordinary decisions have to be made by the members, though it is good practice to hold an AGM to review the company’s performance, annual accounts and plan ahead for the forthcoming year.

Purpose of a general meeting:

Shareholders will convene at a general meeting in exceptional circumstances when they need to address an issue or pass a resolution on any matter that extends beyond the directors’ powers. It is possible to pass resolutions in writing, but it is often more beneficial to formally and collectively discuss a proposed resolution at a general meeting - particularly if a company has multiple shareholders who do not interact on a daily basis. If you are a sole director and shareholder of your own company, you will not need to hold any general meetings, because you are the sole decision-maker.

The types of matters discussed at a general meeting may include:

• Appointing or removing a director
• Altering the articles of association
• Changing the shareholders’ agreement
• Changing the company’s share structure by issuing more shares or creating different classes of shares
• Approving directors’ loans
• Approving directors’ service contracts
• Adding or removing directors’ powers
• Appointing or removing an auditor
• Changing the company structure
• Approving the transfer of shares as proposed by a director

Under the Companies Act 2006, all members’ decisions can be made by written resolution, with the exception of dismissing a director or removing an auditor before the end of their contractual period. It is possible to include provisions in the articles to further restrict decision-making by written resolution, if required.

Notice period:

A general meeting can be called by the company directors or shareholders. A minimum notice period of 14 days is required for calling a general meeting in a private limited company. The notice must be sent to every member and director, and any persons entitled to a share on the death or bankruptcy of a shareholder. Notice can be given in hard copy form, electronic form or by posting it on the company website. The following information should be disclosed on the notice:

• Time, date and location of the general meeting
• Purpose of the meeting
• Proposed resolutions to be agreed
• Statement that every shareholder may appoint a proxy if they are unable to attend
• Notice date
• Name(s) of director(s) or shareholder(s) calling the meeting

Minutes of meetings:

The company secretary (or director) must arrange for minutes to be taken to record the names of those present at the meeting, a summary of the proceedings and the outcome of any proposed resolution. A copy of the minutes should be kept in the company’s statutory register held at the registered office or principal place of business for a minimum of 10 years. Copies should also be issued to the company members.

Resolutions:

A resolution is a legally binding agreement or decision made by company members or directors. The outcome of a resolution is determined by the votes cast for and against the decision. If the required majority is reached, the resolution is ‘passed’. If the necessary majority is not reached, the proposed resolution fails.

Different types of resolutions:

Any decision made by the directors of a company is called a resolution, but there are two types of members’ resolutions: ordinary and special.

An ordinary resolution is passed when a simple majority vote is reached (above 50%). This type of resolution can be used for all decisions unless the Companies Act or articles of association specifies the need for a special resolution for any other matter.

A special resolution is passed when a 75% majority vote is reached.

Both types of resolutions can be passed at a general meeting or in writing (a written resolution), apart from a resolution to dismiss a director or remove an auditor before the expiration of his or her contract. If a member is unable to attend a general meeting, he or she can appoint a proxy.

Passing a resolution:

Voting at general meetings is normally taken by a show of hands or a poll. If the vote is taken as a show of hands, the percentage is worked out as one vote per shareholder. If a poll is taken, the votes are worked out in proportion to the number of shares held by each shareholder - most shares carry one vote; therefore, shareholders with multiple shares can cast more votes.

The conditions of members’ voting rights are usually stated in the articles of association and shareholders’ agreement. Generally, however, a member will have the same number of votes whether passing a resolution at a general meeting or on a written resolution.

Resolutions must be proposed in the notice that is circulated prior to a board meeting or general meeting. Proposed members’ resolutions must be also be issued to the auditors, if a company has any. If the proposed resolution is for the removal of a director, the director in question must receive a copy.

Copies of all special resolutions should be filed with Companies House within 15 days and issued to all shareholders and the company auditor, if applicable. Copies should also be kept in the company’s statutory register at the registered office address or principal place of business for a minimum of 10 years.