A general meeting is a formal meeting of all members (i.e. shareholders or guarantors) of a limited company who are entitled to attend. The purpose of this type of meeting is to allow members to convene face-to-face to discuss the performance of the business, consider future activities and strategies, and make decisions on significant affairs that are beyond the remit of the directors’ powers and duties.
Under the Companies Act 2006, general meetings (incl. Annual General Meetings) are not a statutory requirement for private limited companies. You can, however, choose to hold general meetings whenever the need arises. Some companies include provisions in their articles requiring them to hold regular general meetings and/or AGMs.
A successful business relies on effective communication, so these meetings can be of great benefit to companies.
Procedure for calling and holding general meetings
Part 13 of the Companies Act 2006 sets out the statutory framework for calling and holding general meetings. These rules and procedures are supplemented in the articles of association and, in some companies, a shareholders’ agreement, so it’s important to refer to all relevant sources to determine the specific rules that apply to a particular company.
General meetings can be called by the board of directors or by members. If directors want to arrange a general meeting, they must provide members with at least 14 days’ notice (or 21 days for PLCs), unless a longer period is required under the articles. If members wish to hold a general meeting, they can make a request to the directors.
Directors are required to call a general meeting if they receive a request from:
- shareholders representing at least 5% of the company’s paid-up share capital and who have the right to vote at general meetings, or
- guarantors (i.e. the members of a limited by guarantee company) who represent at least 5% of the total voting rights of all members
Upon receiving such a valid request, the directors must call a general meeting within 21 days. The meeting should be scheduled for a date no later than 28 days after the date of the notice calling the meeting. In some circumstances, meetings can be held at short notice if the requisite majority of members provide consent.
Notice of a general meeting must be sent to all members entitled to attend general meetings, in addition to the company directors and auditors. It can be delivered by post or by electronic means. The notice must state the date, time, and place of the meeting, an outline of the agenda or the general nature of the business that will be dealt with, details of any proposed company resolutions, and any additional information relevant to the meeting.
If a special resolution is to be proposed at a general meeting, the notice must clearly state this and include the full text of the special resolution.
Decision-making at general meetings
Company members make collective decisions at general meetings by ‘passing resolutions’. Details of any motion (proposed resolution) must be provided to every eligible member prior to the meeting, allowing sufficient time for consideration before voting on the motion. At the meeting, members may discuss the motion, raising any queries or concerns they may have, before casting their votes.
To pass a resolution at a general meeting, members are required to cast their votes for or against the motion. This is done by a show of hands or by a poll. If the requisite number of votes is achieved in favour of the motion, the decision becomes legally binding. The number of votes required to pass a resolution will depend on whether it is an ordinary resolution (which requires a 50% majority) or a special resolution (which requires a 75% majority).
If any members are unable to attend a general meeting, it is possible to appoint a proxy who will represent the member’s interests and cast votes on their behalf. Notice of any proxies must be provided to the company prior to the general meeting.
Can members make decisions without holding a general meeting?
It is possible, and fairly standard, for company members to make decisions without holding a general meeting. To do so, a written resolution describing the proposal is circulated to all eligible members, either by post or electronic means.
Members cast their votes by whichever method is outlined in the written resolution. This will normally involve signing and returning the document, responding by email, or completing a form on a website.
What shareholder decisions are made at a general meeting?
General meetings are normally required when issues arise concerning exceptional company issues such as share capital, director appointments, the company’s constitution, and significant financial arrangements. Typically, the types of issues and decisions that are dealt with at general meetings include:
- the appointment and removal of company directors
- making changes to the directors’ powers and duties
- approving directors’ contracts and remuneration
- altering the articles of association
- creating a shareholders’ agreement, or making changes to an existing one
- altering the company’s objects
- changing the name of the company
- allotting (issuing) new shares
- creating new classes of shares
- reducing the number of shares
- transferring shares
- changing the currency of shares
- matters relating to the death of a director or shareholder
- winding up the company
- approving significant loans
- evaluating the financial position, performance, and management of the company
- entering into significant contracts
- discussing and/or approving annual accounts
- the appointment of external auditors
- mergers and acquisitions
Some companies may grant additional powers to their directors allowing them to make decisions on some of these matters. To do so, the articles of association and/or shareholders’ agreement must be updated accordingly.
Keeping minutes of general meetings
To comply with Section 355 of the Companies Act 2006, limited companies must keep minutes of all general meetings and copies of all ordinary resolutions or special resolutions of members passed at a general meeting, even if the company has only one member.
Typically, minutes of general meetings should include the following information:
- Company name and registered office address
- Date, time, and place of general meeting
- Names of everyone in attendance
- Details of any proxies and who they represent
- Names of absentees
- Proposed resolution(s)
- Result of resolution(s)
- List of members for and against resolution(s)
- Objections or queries raised
- Any other business discussed
- Closing remarks
These records must be kept at the company’s inspection location for a period of at least 10 years from the date of the meeting/resolution. Written resolutions of members should also be kept for the same period.
What’s the difference between a general meeting and a board meeting?
A general meeting is a meeting of a company’s shareholders or guarantors. A board meeting, on the other hand, is a formal meeting of a company’s directors that provides an opportunity for directors to evaluate and discuss the company’s performance and make collective decisions within the remit of their powers.
In many cases, a company’s members and directors are the same people. However, there are different rules and procedures that must still be followed to maintain a clear distinction between these two roles.
For more information on board meetings and the decision-making powers of company directors, read our blog about the difference between board resolutions and board minutes.