General Assembly: How to make decisions? Why is it important?

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A general meeting is a joint meeting of shareholders entitled to the company’s share capital. Generally, once a year, the shareholders hold a formal program to discuss various aspects of the company.

The same formal program is called general assembly. The general meeting can also be considered as a legal and practical means for the shareholders to control the management of the company. The General Assembly is a place where all shareholders can attend and discuss and come to a definite conclusion. Therefore, the General Assembly can be considered the highest body for the company.

Legal provisions regarding the General Assembly

Article 67 of the Companies Act 2063 states that there will be two types of company: annual general meeting and special general meeting. Article 76 states that every public company must hold its first annual general meeting within one year of being allowed to start business. Thereafter, the company must hold its annual general meeting within six months of the completion of each fiscal year.

If the annual general meeting is not convened within 3 months of the expiration date, the office may direct such company to convene the annual general meeting. Similarly, if the company does not hold a general meeting within the stipulated time, the shareholders can file a petition in the court.

Meeting of shareholders

A general meeting is a meeting of shareholders. The shareholder or representative must be present to represent more than 50 percent of the total number of shares allotted to the public company, except the number specified for the quorum in the rules of the public company.

Similarly, if the general meeting cannot be held due to insufficient quorum, at least three shareholders should be present at the next meeting after giving 7 days notice to represent 25 percent of the total number of shares distributed. Similarly, the quorum of the General Assembly is as written in the rules of the company.

Topics of discussion

The Board of Directors should act according to the wishes of the shareholders passed by the General Assembly. The annual general meeting of the company usually discusses issues like annual report of the company, audit report and report of the operator.

Unless the office gives prior approval, the public company should hold the general meeting in the district where the company registrar’s office is located or in a place suitable for most of the shareholders attached to it.In order to increase the authorized capital of the company, to change the share capital, to change the name and main objective, to decide on the issue of merging the company, issuance of bonus shares, transformation from private to public or from public to private company.

Decisions and reports of the General Assembly

The decision of the General Assembly should be kept in a separate book. The decision must be certified by the chairman of the meeting and the company secretary by the company secretary, and in the case of a non-company by a representative of the shareholders appointed by the majority at the general meeting.

The Public Company must submit the report as per Article 78 approved by the Board of Directors and certified by the Auditor to the Office of the Registrar of Companies 21 days before the Annual General Meeting. Within 30 days of the annual general meeting, the number of shareholders present at the meeting, annual, financial statements, report of the operator and auditor and a copy of the decision of the meeting should be sent to the company registry office.The law also stipulates that companies that do not submit such reports within the stipulated time will have to pay a fine.

Who will convene the general assembly?

Article 82 of the Act provides that the Board of Directors may convene a special general meeting if deemed necessary. In the case of a public company, there is a legal requirement to give notice clearly stating the place, date and subject to be discussed 21 days before the annual general meeting and 15 days before the special general meeting.

Discounts for private companies

Similarly, the private company may extend the period of giving such information by making provision in its regulations. In the case of a private company, the shareholders, unanimous agreement and the rules of the company may not make provision for the general assembly. The unanimous decision of the private company not to make arrangements for the general meeting should have been passed in writing or by the general meeting.

In the case of private, provision will be made in the rules without making any provision regarding the procedure of holding general assembly. In such an arrangement, a lot of freedom is given to a private company. Except as otherwise provided by the sole shareholder company in the rules, all the actions and decisions to be taken by the general assembly by law will be in accordance with the written decision of the single shareholder. There is no need to call a general assembly for this.

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