CORPORATE LAW PRACTICE WEEK 12 CORPORATE GOVERNANCE (3): MEMBERSHIP, MEETINGS & RESOLUTIONS.
WEEK 12-
CORPORATE GOVERNANCE (3): MEMBERSHIP, MEETINGS & RESOLUTIONS.
:: IDENTIFY VARIOUS WAYS OF ACQUISITION OF MEMBERSHIP OF COMPANY. From Section 79 CAMA, members include;
–Subscribers to the Memorandum of the company. who are automatic members and the Register of members should reflect.
– Others who agree in writing to become a member: These include those that become members by 2. allotment[1], transfer of shares or transmission (of shares of deceased shareholder)… provided in all these instances, their names are entered in the register of members.
Each member should be a shareholder and hold at least one share (for co’s that have share).
Rights of Shareholders: are determined by terms of issue and the articles Section 114. Shareholders are entitled to; receive notice of meeting, attend and vote thereat; right to dividend when declared; right to company assets upon winding up Kotoye v Saraki.
Duties: He is to pay the amount unpaid on shares he holds[2], and to receive dividends lawfully.
A person entitled to have his name registered should notify the co failing which he sues in FHC to have his name entered in register.
Note that he can also proceed (as beneficial owner) against the transferor (registered owner) for benefits and dividends derived.
A person entitled to have certificate can demand for it and if no response after 10 days sue (by Originating Summons supported with verifying affidavit showing chronology of facts and necessary documents) in FHC for recovery of certificate with damages for detinue.
:: IDENTIFY TYPES OF COMPANY MEETINGS: company meetings may be Statutory, Annual or Extra-Ordinary.
- Statutory Meeting Section 211: a public company must hold this meeting within 6 months from the date of its incorporation… usually to consider; issues in respect to company’s formation, commencement of business, Statutory Report[3] (which must have been served on members at least 21 days before the meeting and to be delivered to CAC else may be a ground for petition for winding up of the company), etc. there is a N50 penalty for every day of default.
- Annual General Meeting: held annually (not more than 15 months must elapse between each… extendable by not more than 3 months by the commission) but the first AGM may be held within 18 months of incorporation. 213. 21 days notice. Needed.
- Extra-Ordinary General Meeting: held at any time to deal with matters that cannot wait until the next Annual General Meeting. It may be called by Directors (Board or one or more) or requisitioned by Members of not less than 1/10 paid up voting share capital where directors fail to call after 21 days from deposit of notice of requisition[4] or by the Court (pursuant to application by PR of Directors or Shareholders (where they dead) or Creditors (where PR’s refuse to act). All Businesses transacted in EGM are deemed to be special.
- Court Ordered Meeting: where it is impracticable or impossible to call a meeting. Ordered on application of directors or a person entitled to vote[5] at such meeting Okeowo v Migliore
Ordinary Business may include; declaration of dividend, presentation of financial statement, directors report[6], Auditors report, rotation of directors, appointment and remuneration of auditors).
Special businesses may include;
:: TYPES OF RESOLUTIONS. Ordinary (at least 50 percent), Special (at least 2/3rd)
:: ETHICAL ISSUES IN COMPANY MEMBERSHIP, MEETINGS AND RESOLUTIONS
:: PREPARATION OF MEETINGS AND PROCEEDINGS OF MEETINGS.
Venue: SGM and AGM must be held in Nigeria Section 216.
Notice (218-222): to adequately inform the members of the kind of meeting, venue, time, agenda, items to be discussed, special resolution(s) (if any), etc.
For AGM notice should be served at least 21 days to the date of meeting. But shorter notice may be given if all members entitled to attend and vote agree so. For other meetings, 95 percent holders with right to attend and vote at the meeting. Note that public companies should additionally advertise notice of meeting in at least one daily newspaper 21 days to the meeting.
Failure to give notice invalidates the meeting at the instance of the person entitled to receive notice of it. Accidental omission to give notice may be pardoned.
Quorum 232: the minimum number of members to be present before meeting can commence should be determined by articles but where articles are silent, 1/3 or 25 whichever is less.
Voting (224): is by show of hands except a poll is demanded[7]. The right to poll may only be taken away on issues of election of a chairman or adjournment. In other matters, the right to demand for poll cannot be taken away not even by articles.
Where resolution tallies, chairman is entitled to a second/casting vote to break the tie.
Proxy: may be appointed by a member to represent him and act in his stead at meeting. While a company appoints a representative[8].
Resolutions: decisions are made by the company through passing resolutions at the general meeting.
Resolutions may be ordinary or special. The former requires simple majority while the latter requires at least ¾ majority of votes.
For private companies, written resolution signed by all members can be valid as if passed in General Meeting-234.
Where a resolution requires special notice, notice of intention to move it should be given to the company which in turn gives at least 21 days-notice to members.
Certain resolutions (special resolutions, unanimous resolutions, voluntary winding up resolutions) should be registered with CAC within 15 days of passing it.
Minutes of meeting: records of proceeding of GM, BOD meetings, Management Meetings… must be kept at the company’s registered office and be available for inspection. International Agricultural Industries (Nig) v Chika Brothers Ltd.
Class meetings: may be held by a class of the company’s shareholders. The afore-discussed also apply.
:: ETHICAL ISSUES INVOLVED IN COMPANY MEMBERSHIP, MEETINGS AND RESOLUTIONS.
[1] i.e. allocation of specified number of shares upon application to be accepted within 42 days and applicant intimated
[2] Purchasers of shares by SATT are liable to pay any amount unpaid on them.
[3] Contains share allotment details, names address and descriptions of directors, auditors, secretary, particulars of commission or brokerage paid, receipts of the company so far.
[4] Where no quorum is met within one hour, that is the end of the matter and there can be no adjournments.
[5] Note that persons entitled to attend meetings (every member, legal representative, director, auditor, company secretary) should get notice of the meeting. Failure to serve notice may invalidate meeting at the instance of the aggrieved party except it was an accidental ommission.
[6] On how the company has been faring.
[7] Poll can be demanded by chairman, at least 3 members or holder of not less than 1/10th of total voting rights or fully paid up shares
[8] A co ltd by guarantee needs its articles to authorise it before it can accept proxy since there is really no share proportion like that.
