It is a general knowledge that a company is a separate distinct entity from its members. However, because it is an artificial person, the decisions which a company must take are done through its members and directors. These decisions are made in the form of resolutions passed at a company’s meeting.
In law, a company is allowed to convene three types of meetings:
- Annual general meeting
- Extraordinary general meeting; and
- Class meeting
We shall quickly examine the first two meetings indicated above.
Annual General Meeting (AGM) :
An annual general meeting is the meeting which a company is mandated to hold every year to discuss business matters by members of the company.
The Board of directors are expected to mandatory call for this meeting yearly. A 21 days’ notice is sent out to each member intimating them of the meeting.
Failure to summon a company’s annual general meeting attracts a penalty. The meeting can be convened at any day, inclusive of national holidays.
At the annual general meeting, the ordinary business of the company is tabled and handled. If there is any special business, it can also be handled at this meeting.
For newly incorporated companies, the annual general meeting must be summoned within 9 months before the end of the company’s financial year. Subsequent Annual General Meetings are to be convened within 6 months of the end of the financial year, or within 15 months from the last AGM, whichever is later.
Extra-Ordinary General Meeting (EGM)-
Where a company has an urgent business to handle, believes that members input is required, and it’s not convenient to wait for the next AGM, an extra-ordinary general meeting can be conducted.
An Extra-Ordinary General Meeting is convened to handle a company’s special business, only. This special business are matters which relate to the company’s management, and to which member’s input is vital.
Interestingly, even if the meeting is not summoned within the stipulated time, the law does not impose any penalty
Any of the following persons can summon the meeting:
- The Board of Directors
- The Board on the requisition of members (i.e. An extraordinary general meeting can be convened when a number of members signed a requisition to that effect.
- Requisitionists can go ahead to call the meeting, if after submitting his/her requisition, the board did not call for the meeting.