What rights do members have at the Ordinary General Meeting?

Throughout my career, I am still surprised to come across clients who are unaware that their company is required to hold an annual Ordinary General Meeting of Members, and that the convening and holding of the meeting provides an opportunity to exercise several of the rights to which members are entitled, through which they may obtain information about the company.

What is the Ordinary General Meeting of Members?

The General Meeting is the meeting of members held in accordance with legal requirements to deliberate and decide on matters falling within its remit. In particular, the ordinary general meeting of members is the meeting which must be held at least once a year within the first half of each financial year for the purpose of: (i) approving the annual accounts for the previous financial year; (ii) decide on the allocation of profits; and (iii) approve, where applicable, the management of the company by the board of directors.

Procedures for the Ordinary General Meeting of Members

At the meeting, there must be a Chair and a Secretary; a list of attendees must be drawn up; and deliberations and votes must take place, which must be recorded in writing and set out in the minutes. These minutes must be approved and shall be legally binding from the date of approval; they must be signed by the Secretary of the Meeting with the Chairman’s endorsement. Although this is only required in the case of general meetings, it is advisable for all members to sign both the attendance list and at the end of the minutes as a sign of their agreement and approval of the terms thereof, so that they can never deny having attended or disagree with the terms of the resolutions set out therein.

It should also be borne in mind that the certified copy of the minutes filed with the Commercial Register alongside the annual accounts is not sufficient to comply with the above, as it is necessary for the minutes of the ordinary general meeting to be duly recorded annually in the company’s minute book.

What rights do members have?

Having said that, my aim is to provide a brief summary of the rights to which members are entitled from the time the Ordinary General Meeting is convened until it is held, with a view to recommending that they make use of these rights should they wish or need to obtain information about the company or wish to defend their interests. In general:

1. All members have right to assistance to the General Meeting. They may attend in person or be duly represented.
2. Once the notice of the general meeting has been issued, any member may to obtain from the company, immediately and free of charge, the documents that are to be submitted to the company for approval.
3. A shareholder who holds 1% of the share capital of a public limited company and 5% of a private limited company may apply to the board of directors the appointment of a notary to attend the General Meeting of Members and draw up the minutes of the General Meeting.
4. In both public limited companies and private limited companies, a right to information in favour of members on similar terms. In particular, this right – which consists of requesting information or clarifications – may be exercised in relation to matters on the agenda, either before or during the course of the meeting.
5. Right to challenge company resolutions.
6. It is hereby established that the right of a member who has voted in favour of the distribution of the company’s profits upon the dissolution of the Company in the event that the general meeting does not resolve to distribute as a dividend at least one third of the profits arising from the company’s core business activities generated during the previous financial year, which are legally distributable. This right may be exercised from the fifth financial year onwards, counting from the date of the company’s registration in the Commercial Register.

Finally, it is important to bear in mind that, in both limited liability companies and public limited companies which are not required to have their annual accounts audited, any shareholder may to request the company registrar for the registered office to appoint, at the company’s expense, an auditor to review the annual accounts for a specific financial year provided that three months have not elapsed since the end of that financial year.

If you are due to attend an Ordinary General Meeting of Members in the near future, seek advice from solicitors specialising in commercial and company law. Knowing your rights as a member will save you a lot of trouble.

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