CORPORATE LAW (LAW 485) CHAPTER 9 MEETING
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At the end of this topic, students should be able to:
Explain and examine various legal requirements of meetings in a company
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OUTLINE Introduction Types of Meeting Notice Conduct/proceeding of meeting: Quorum Chairing Meeting Voting Proxies Corporate representatives Resolutions Minutes Irregularities
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INTRODUCTION Discussions in meetings is one of the best practical expressions of the democratic way of life. The New Shorter Oxford Dictionary (1993) defines the meaning of ‘meeting’ as: “A private or public gathering or assembly or people for entertainment, discussion, legislation, etc;… the action or an act of coming together, encountering, assembling…”. The Oxford Companion to Law (1980) defines ‘meeting’ as: “ a gathering of 2 or more persons called to receive a report, take a decision or otherwise take some lawful action”. Lord Coleridge CJ in the case of Sharp v Dawes(1876) 2 QBD 26, CA held, the word ‘meeting’ prima facie means: “a coming together of more than one person”. 4
INTRODUCTION From the definition of meeting, generally it requires a plurality of persons i.e. 2 or more. However in certain circumstances a singular person may constitute a valid meeting (Sharp v Dawes). These include:
Where all the shares of a particular class in a company are held by one member, that member alone may constitute a meeting of members of that class (East v Bennet Bros Ltd. [1911] 1 Ch 163.). Where one creditor has prove his debt in a bankruptcy proceeding and there is only one creditor entitled to vote, he alone may constitute a valid meeting of the creditors (Re Thomas; ex parte Warner [1911] WN 123). Where the directors of a company delegate their authority to a committee, it appears that there is nothing to prevent a committee of one director being appointed if the articles so allow (Re Taurine Co (1883) 25 Ch D 118, CA. Where in ordering a meeting pursuant to s 150, the court can make a discretion that a quorum of one member be constituted. Where the relevant criterion in determining the quorum is the percentage of the share value and not the physical person present. An individual shareholder who owns the prescribed share value or more will be sufficient to constituted a quorum (Isetan(S’pore) Ltd v Wisma Development Pte Ltd & Anor {1993} 1 SLR 997, CA.). 5
INTRODUCTION Meeting is the place and time where members can express their will. Is part of the internal regulation of the companies. Therefore, governed by AOA. Also governed by the CA. Theoretically, GM is the most important organ of the co. However, practically, the BOD has very broad power of management given by AOA. The BOD has ability to control the calling of meetings, the matters discussed and to some extent the voting at meetings. The provision of law regarding meeting is to ensure that the will of the members is reflected in the running of the co. Also to give members opportunities to require information regarding the company’s affairs. 6
TYPES OF MEETING
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STATUTORY MEETINGS S142(1) – a public company (limited co and has a share capital) must hold its 1 st meeting between 1 to 3 months after it commences business. Purpose – to inform shareholders on facts about the company which are contained in the director’s statutory report. S142(2) – a copy of the report must be sent by directors to every members at least 7 day before the meeting. S142(5) – a copy also must be lodged with the Registrar, together with any auditor’s report. 8
S 142(3) REQUIRES THE STATUTORY REPORT TO CONTAIN THE FOLLOWING INFORMATION: The total number of shares allotted, the amount for which they were allotted and the amount paid up or partly paid. The total amount of cash received in respect the shares allotted. Details of receipts and payments up to 7 days before the date of the report, including estimates of preliminary expenses and the balance remaining in hand; The names and address of the directors and other officers; and Particulars of the proposed contracts. 9
EFFECT OF FAILURE TO HOLD STATUTORY MEETING AND TO LODGE STATUTORY REPORT. S218(1)(b) – is a
ground for a compulsory winding up.
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AGM S143- requires all companies to hold AGM at least once in every calendar year and not more than 15 months after the last AGM. S143(1) –If the company hold its 1 st AGM within 18 months after its incorporation, it is not necessary for the company to hold AGM in that year or the following year.
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EFFECT OF FAILURE TO HOLD AGM The company and the defaulting officers is committing an offence. S143(4) – on application by any members, the court may order that a GM be convened.
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S169 – THE FOLLOWING INFORMATION MUST BE LAID BEFORE THE AGM: The profit and loss account (s169(1); The balance sheet (s169(3); The directors’ report (s169(5)); and auditor’s report(s169(4) Annual matters also part of the ordinary business of the AGM. Includes: Election of directors; Declaration of dividends – art 98 of Table A; and Appointment and fixing of auditor’s payment, if necessary – s172(1) 13
AGM Is the only meeting of member that company must hold. Members can get information and can question the directors on the company’s affairs. Among the power of AGM: Rights to remove directors – art 69, Table A To meet and pass resolutions May transact any other business allowed by the AOA
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EGM Is a GM other than statutory and AGM. Any director may whenever he think fit convene an EGM – art 44, Table A. S 144 enables members to requisition in writing for the convening of an EGM in the following situations: Where a co has a s/capital –by members holding at least 10% of the capital carrying voting rights; and If the co has no s/capital – by members representing at least 10% of the total voting rights. 15
EGM (CONT) S144- upon requisition, the director must convene an EGM as soon as practicable but must not later than 2 months after the receipt by the co of the requisition. S144(2) says that the requisition must state the objects of the meeting and signed by the requisitionists and deposited it at the registered office.
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EGM (CONT) The director may, however, may refuse to act on the requisition, if the proposed resolutions involve interference with the power conferred by AOA on the directors. Credit Development Pte. Ltd v IMO Pte. Ltd [1993] 2 SLR 370  S’pore H/court held that the directors are not bound To act on a resolution which is beyond the powers of the meeting. Such a resolution is null and void.
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EGM (CONT) S144(3) – if the directors fail to convene a EGM within 21 days after a requisition, the requisitioning members may themselves convene the meeting. That EGM must be held not later than 3 months after the making of the requisition to directors. SJA Bhd v HLB Nominees Sdn. Bhd [2002] 4 MLJ 574 – the 3 months allowed under s144(3) runs from the date of deposit of the requisition and not from the expiry of 21 days of the date of deposit. S144(4) imposes duty on the company to pay all expenses incurred by the requisitioning members .
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CLASS MEETING Provision in made under the AOA and the CA for the calling of meeting of class of shareholder – for a company which issues different classes of shares. E.g. to get consent of ž of the holder of share in case to vary the right attached to a certain class of shares.
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NOTICE OF MEETING Purpose – to enables members to know what is to be done at the meeting, so that they can decide whether to attend or not and how to vote. S145(2) – a meeting requires at least 14 days notice or longer as allowed by AOA. S145(2A)(new) – for public co requires not less than 21 days written notice or longer as provided by AOA. S152(1) – meeting to pass a special resolution requires at least 21 days written notice. Less than 21 days allowed if agreed upon by at least 90% of the voting shares or 90% of the total voting rights. Notices mat served personally or by posting to the address of the members –Table A , art 108.
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SPECIAL NOTICE In certain circumstances the CA requires ‘special notice’ ‘Special notice’ means at least 28 days’ notice to the company or at least 14 days when notice is given by the co – s153 Special notice required to remove an auditor (s 172(4), or to remove a director of a public company (S 128)
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CONTENT OF NOTICE Must include the following as specified by art 45, Table A Place, date and hour of the meeting, and in case of special business, the general nature of the business to be transacted. For AGM – no need to state the recurring business normally transacted, e.g. consideration of accounts, report, declaration of dividend etc ; Table A , art 46.
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CONDUCT / PROCEEDING OF MEETING Quorum Chairing Meeting Voting Proxies Corporate representatives Resolutions Minutes Irregularities
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QUORUM A valid GM is one which is properly convened, properly constituted and properly conducted. The AOA usually fix the number of members who must be present in order to constitute a valid meeting. Generally, a resolution passed by a meeting will be void if at the time of passing the resolution a quorum is not present. (United Investment & Finance Ltd v tee Chin Yong [1967] 1 MLJ 31).
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QUORUM (CONT) A quorum is the minimum numbers of members whose presence is necessary for a meeting to validly transact business. s147(1) – a quorum is 2 members personally present (a proxy is not to be included in a quorum), unless the AOA provides otherwise. Unless allowed by AOA, a meeting where the only person present, holds a proxy from another member is invalid – Re Salvage Engineers Ltd [1962] MLJ 438. Unless allowed by AOA, a meeting cannot be held by 1 member and any resolutions passed at such a meeting are invalid. 25
SUM HONG KUM V LI PIN FURNITURE INDUSTRIES PTE LTD [1996] 2 SLR 488 The P was removed as a director at a meeting without the proper quorum. Held – the meeting was invalid. The procedural irregularities in the meeting caused substantial injustice to the P and could not be validated.
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WHEN QUORUM REQUIRED? At the commencement of the meeting? or at the time business is transacted? Or throughout the meeting up to it conclusion? Depends on the construction of the AOA. Table A art 47 – requires a quorum to be present at the commencement of the meeting in order to transact business.
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TAN GUAN ENG V BH LOW HOLDINGS SDN. BHD [1992] MLJ 105 The H/Court construed the relevant article to mean that a quorum was required only at the time when the meeting proceeded to business. Given that there was a quorum when business commenced, the continued meeting, with the presence of only the holder of a valid proxy, was a valid meeting and the resolution passed at the meeting was also valid.
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TAN GUAN ENG V BH LOW HOLDINGS SDN. BHD [1992] MLJ 105 An EGM was requisitioned and was subsequently convened for the purpose of removing 2 persons as directors and appointing 3 others in their place. AOA: no business should be transacted at any GM unless a quorum of members was present ‘at the time when the meeting proceeds to business’. Again ’2 members must be present’ to form a quorum. The majority shareholder appointed Saw and Tan as his proxies to attend the EGM. At the commencement of the meeting, apart from Saw and Tan 3 other members were also present. One of those 3 presided as chairman of the meeting.
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TAN GUAN ENG V BH LOW HOLDINGS SDN. BHD [1992] MLJ 105 (CONT) After the meeting was called to order, the meeting was adjourned by the chairman and 3 members immediately left the meeting. Saw and Tan remained behind, proceeded with the meeting and passed the desired resolution. The judge found that the appointment of Tan as proxy was invalid as he was not one of the 3 categories allowed under s 147(1)(b). Therefore, effectively at the time when the desired resolution was passed, Saw, a proxy, was the only person remaining at the meeting. 30
TAN GUAN ENG V BH LOW HOLDINGS SDN. BHD [1992] MLJ 105 (CONT) Held: His Lordship considered Re Hartley Baird, Sharp v Dawes and East v Bernett and concluded that the desired resolution was a valid one. It was unfortunate that the case of Re London Flats was not brought to the attention of the learned judge. The cases referred to were different. I the departure of one member only reduced the number to 9. the quorum was 10.
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RE LONDON FLATS LTD [1969] 1 WLR 711; [1969] 2 ALL ER 744. Held: The R’s purported appointment of himself as liquidator was a nullity on the basis that at the time the resolution was passed, only one member, i.e. the R, was present. The other one had left the meeting.
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If a quorum not present within ½ hour after the appointed time of a requisitioned meeting, the meeting is dissolved. In other meeting – it is adjourned to the time and place determined by the directors. If no such determination, adjourned to the following week at the same time and place.
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CHAIRING MEETINGS To ensure the smooth running of the proceeding at a meeting a person should be appointed to chair it. Table A, art 49 provides that the chairperson of director chairs the GM. If no chairperson or the chairperson unwilling or if he or she not present within 15 minutes, the members present must elect one of them as chairperson. The chairperson has no right to adjourn a meeting at his own pleasure – Tan Guan Eng’s case. Art 53, Table A – where the vote are equal, the chairperson is often given a casting vote in addition to the normal voting rights of a member. S156(1) The chairperson of the meeting or of the next succeeding meeting is required to sign the minutes. 34
VOTING The right to vote is an important power conferred upon the members of a company. Unless prevented by the AOA, a member has a perfect right to exercise his voting power to carry on resolution, although he may have a personal interest in the subject matter of the vote.(Cook v Deek) A shareholder owes no duty to anybody as to how he or she will exercise their vote. However 2 or more members may enter into a lawful agreement(pooling agreement) on how to exercise the voting right. In such a case, they may only vote in the manner as agreed by them. Any breach of this agreement, injunction may be imposed – Tuan Hj Ishak bin Ismail v Leong Hup Holdings [1996] 1 MLJ 661 35
VOTING
S148(1) – subject to certain exceptions every member shall, notwithstanding any provision in MOA or AOA, have a right to attend any GM… and to speak and vote on any resolution before the meeting. Exceptions are where by AOA: A member is prevented from voting unless all calls or other sums personally payable by him in respect of shares in the company have been paid
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HOW TO VOTE? Unless the AOA provides otherwise, voting is by show of hands, in the first instance. Art 54 –on a show of hand, one member = one vote. Proxy not counted. “show of hand” includes a ‘voice vote’ In case of disputes, members can demand a poll. One vote for each share.
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PROXIES A proxy is a person authorised to vote on behalf of the appointing member. Members who are entitled to attend and vote at a meeting are entitled to appoint a proxy to attend and vote in their place. S149(1) - The proxy need not be a member. S149(1)(a) - A proxy has the same right to speak at a meeting as the appointing member, but can only vote on a poll, unless allowed by AOA to vote on a show of hand. 38
CORPORATE REPRESENTATIVES A corporation that is a member of a company my, by resolution of its directors, authorise a person to act as its representatives at meeting of the company. S1417(3) – that person entitled to exercise the same powers as the member corporation would have been entitled to exercise.
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RESOLUTIONS Ordinary resolution Is passed by a simple majority of members who are present and voting at the particular meeting. On matter of less important.
Special resolution S152(1) can only be passed by ¾ majority of those present and entitled to vote at the meeting and requires 21 days’ notice. On matter of more important. E.g.
altering the object clause of MOA – S28(1) Altering AOA – s31(1) Reducing the company’s issued capital – s64
S152(2) –the holder of at least 95% with the right to vote, may agree to pass a special resolution with less than 21 days’ notice. AOA may provide the requirement of 2/3 majority – Edward Halliwell. 40
MINUTES A company must keep minutes of all proceedings at GM and meeting of directors and managers (if any). Must be entered in minutes books within 14 days of the meeting. Must be signed by the chairman. S156(4)-Non-compliance with this requirements constitutes to an offence by the co and the defaulting officer. S156(2) – minutes = evidence of the proceedings. S157(1)Must be kept at the company’s registered office open for inspection by members without charge. S157(2) member may also request a copy of any minutes of a GM. 41
IRREGULARITIES S355(2)- Any irregularities in meeting my be validated by the court unless the court is of the opinion that the irregularity has caused or may cause substantial injustice
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