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Meetings are an important aspect of any company as it not only speaks of the corporate governance and management of such company but also how legally compliant the company is. These meetings ensure that shareholders, directors, and other stakeholders can discuss and decide on essential matters affecting the company.
The law that guides companies’ meetings is the Companies and Allied Matters Act 2020 (CAMA) and the regulatory body in charge of enforcement is the corporate affairs commission (CAC).
There are different meetings that companies are expected to observe and, in this article, we will be looking at them.
Types of Meetings
1. Statutory Meeting
Only public companies are expected to hold a statutory meeting of the members of the company within a period of six months from the date of its incorporation. This is a requirement by law that excludes private companies.
The purpose of this meeting is to give members a progress report from directors and promoters immediately after the incorporation of the company. Failure to hold the meeting is a ground for winding-up but the court may instead, order that the meeting should be held and the defaulters to pay the cost. The directors are expected to send a statutory report at least 21 days before this meeting to every member of the company, the report will contain pre incorporation details and all that will be discussed at the meeting.
2. Annual General Meeting (AGM)
This Meeting Is Mandatory for All Companies in Nigeria and it must be held within 18 months of Incorporation, and Subsequently, not Later than 15 months after the last AGM.it is important to note that as far as a company holds its first annual general meeting within 18 months of its incorporation it does not need to hold another one that same year or in the following year.
After the first annual general meeting, the Commission has the power to extend the time within which any annual general meeting will be held but it is not more than an extra three months added to the required timeline which means it must not exceed 18 months between the date of the last annual general meeting and the date of any meeting extended.
The purpose of an AGM is to present the company’s financial statements, declare dividends, appoint/reappoint directors and auditors, and discuss other critical matters. Notice of the meeting must be given at least 21 days before the meeting to:
- Every member of a company
- Anyone who share devolves to by reason of being a legal representative, receiver or a trustee in bankruptcy of a member of a company
- Directors of a company
- Auditor for the time being of the company
- The company secretary
- CAC in the case of public companies.
Every member either in person or by proxy (when permitted) is entitled to attend the meeting, speak and vote on any matter discussed at the AGM can do so. After holding an AGM, a copy of the resolution at the meeting is expected to be filed with CAC within 15 days of passing the resolution.
Please note that a member is a shareholder or subscriber of the Memorandum and Articles of Association a Company or every other person who agrees in writing to become a member of a company whose name is entered as member in the Company’s register of members.
When a company fails to hold an AGM, CAC can on its own or through the application of a member of the company direct that it be held.
However, by the provisions of section 237 sub section 1 of CAMA, small companies and those with a Single Shareholder are not mandated to hold an AGM.
3. Extraordinary General Meeting (EGM)
Extraordinary general meeting are meetings held to handle emergency corporate matters that cannot wait till the AGM such as increase in share capital, amendment of the memorandum and articles of association, approval to buy back company shares, removal of a top executive etc. The meeting can be called by the shareholders and directors of the company. Notice of the meeting must be given at least 21 days before the meeting. Notice can also be given for a shorter period where it is called by majority of the members who together hold at least 95% of shares with the right to vote and attend the meeting.
4. Board of Directors Meeting
The directors of a company are expected to hold their first meeting not later than six months after incorporation of the company. This is important because it will give the directors the avenue to discuss the day-to-day management and operations of the company. Subsequently board meetings are to be held frequently or as may be specified by the company’s articles of association. There is no fixed number of times the board of directors are to meet in a year as it is a matter of discretion and when the need arises. Notice of this meeting must be given at least 14 days before the meeting but the option for the board to hold meetings when the need arises gives the discretion to waive the notice period as well.
What to include in a Notice of Meeting
A notice of meeting must include the date, time, and venue of the meeting. The agenda of the meeting and any relevant documents should be sent to all entitled participants.
What Happens When Company Meetings Are Not Held?
Depending on the type of company, CAC may impose some fines and sanctions for non-compliance. also, the officers of the company run a risk of being charged with an offense.
Can Meetings be held Virtually?
A private company may hold its general meetings virtually provided that such meetings are conducted in accordance with the articles of the company.
Venue of a meeting
All statutory and annual general meetings are expected to be held in Nigeria except for a small private company with one shareholder. A private company is allowed to hold its general meetings electronically provided that such meetings are conducted in accordance with the articles of the company
Conclusion
Meetings are a vital part of any company as it helps to foster corporate accountability both with the regulators and the company’s internal workforce. Please note that with the exception of small companies and companies having a single shareholder, all statutory and annual general meetings shall be held in Nigeria.
If you would like to get more details on how to organize any of these meetings please feel free to reach out to us.