A general meeting is a meeting of a company’s shareholders. For a company to validly convene a general meeting, appropriate notice must be given to all the shareholders entitled to receive notice. As well as the company’s shareholders, notice must also be given to the directors, auditors and to anybody else who may be entitled to receive notice under the company’s articles of association.
Getting notice of the meeting right is important: get it wrong and the business transacted at the meeting may not be lawful. So here are some useful tips:
Notice of meeting
The notice must be clear, concise and comply with all the relevant legal requirements. It must state the date, time and place of the meeting along with the general nature of the business which is to be conducted.
Notice can be given in hard copy or, if certain conditions are met, electronically (such as by email, where the shareholders have consented to receiving notice in this way, or by the details of the meeting being published on the company’s website).
If a company fails to give notice to a person who is entitled to receive it, there is a risk that the proceedings at the meeting may be invalid. However, an accidental failure to give notice of a general meeting to one or more persons will not result in the meeting being invalid.
If a special resolution is being proposed at the meeting, the notice must contain details of it, including the full text of the resolution. There is no requirement to include details of any ordinary resolutions, although it is common practice to do so as this can benefit the shareholders.
Notices should also contain explanatory notes relating to the administrative and logistical aspects of the meeting, such as how proxies are to be appointed or how the voting process at the meeting will work.
So now you know what the notice of meeting should contain, what period of notice is required?
The required notice period depends on the nature of the company and the type of meeting being convened. Notice requirements differ depending on whether the company is a traded company or not. A traded company is one whose shares are admitted to trading on a regulated market in the EEA. In the UK this means companies on the Official List of the London Stock Exchange. An AIM company is not classed as a trading company.
A public company must hold an annual general meeting (AGM) each year. There is no requirement for a private company to hold an AGM but the company’s articles may require it to do so.
For a traded company, a general meeting requires 21 clear days’ notice, which can be reduced to 14 when the following conditions are met:
- the meeting is not an AGM;
- the company allows shareholders to vote electronically in a way which is accessible to all the relevant shareholders; and
- a special resolution reducing the notice period to not less than 14 days has been passed (either at the company’s latest AGM held before the general meeting, or at a general meeting held since that AGM).
When calculating ‘clear days’ the day the notice was delivered to the stakeholders and the day of the meeting itself are excluded (see below for when the notice is deemed delivered).
For a company which is not a traded company, a general meeting requires 14 clear days’ notice. 21 clear days’ notice is required for a traded company’s AGM, although this is slightly different for public companies subject to the UK Corporate Governance Code, where the required notice period is 20 working days.
An AGM of a private company which is not a traded company requires 14 clear days’ notice, compared with 21 clear days for an AGM of a non-trading public company.
Deemed delivery of notice
There are rules on when documents are deemed delivered to a company’s shareholders. When calculating the required period of notice, a company must consider these rules, along with any provisions in the company’s articles.
The rules for deemed delivery depend on how the notice is sent:
- by post – 48 hours after postage, to an address in the UK;
- by electronic means – 48 hours after it was sent; and
- on a website – when the material was first made available on the website or, if later, actual or deemed receipt of notice (by post or electronic means) of the fact that the material has been published on a website.
- if a notice is sent by post on Day 1;
- it is deemed served on Day 3;
- the 14 (or 21) ‘clear day’ period starts on Day 4 and ends on Day 17 (or Day 24); and
- the first day the meeting could be held is Day 18 (or Day 25).
It is important that a company ensures the correct period of notice is given to its shareholders otherwise it runs the risk of the meeting being declared invalid. A general meeting is an opportunity for a company to show itself in the best light possible and this starts with ensuring shareholders are well-informed and made aware in a timely manner of the details of the meeting.
Keeping shareholders on-side from the outset helps a meeting run smoothly.
This blog post was written by Elliot Gibson. For further information, please contact:
Sophie Brookes, partner, Corporate team
T: 0161 836 7823