DR. MD.

ABDUL JALIL, COMPANY LAW, 2013 CHAPTER ELEVEN: MEETINGS AND RESOLUTIONS IN A COMPANY MEETINGS Companies hold different types of meeting. Those meeting are basically three types: They are: i. ii. iii. iv. i. Statutory meeting Annual general meeting Extra-ordinary general meeting Class meeting Statutory Meeting

Only public companies limited by shares are required to hold statutory meetings. Other companies are exempted to hold statutory meeting. Statutory meeting is held once in the life time of public company limited by shares and is held at the beginning of company business. Every public company limited by shares must hold statutory meeting not less than one month and not more than three month after the company has receive certificate of commencement of business. ii. Annual General Meeting Every company must hold annual general meeting in every year. The meeting must be held within fifteen months from the last annual general meeting. However, for the first annual meeting eighteen months time is given to hold the meeting. So, the company must hold the first annual general meeting within eighteen (18) months from the date of its incorporation. If the company fails to hold annual general meeting within the time limit mentioned above, the company as well as every officer of the company in default shall be guilty of an offence. When a company fails to hold annual general meeting within the time limit, any member can file a petition to the court requesting to order the company to hold the meeting immediately. The court may receive the petition and may order the company hold the meeting immediately after it has received an application from any member of the company. [Section 143 (4) (b) of Companies Act 1965] iii. Extraordinary General Meeting

A company may hold extraordinary general meeting whenever needed. Statutory meeting is held once in the life time of the company and annual general meeting is held once in a year. In the middle of the two annual general meeting urgent situation may arise to make some resolution. In such situation, extraordinary general meeting held by the company to pass urgent resolution or to make some urgent decision. So, we can say that any meeting other than statutory or annual general meeting is known as extraordinary general meeting and it is called in urgent situation. Extraordinary general meeting is called by written requisition. A written requisition is a written notice given to directors requiring them to call an extraordinary general meeting.

DR. MD. ABDUL JALIL, COMPANY LAW, 2013 2 Two or more members holding not less than one-tenth of the company paid up capital carrying voting right may call extraordinary general meeting by submitting a requisition. Where the company does not have share capital, for example a company by guarantee, members not less than one tenth of total voting right may call an extraordinary general meeting by requisition. Directors also my call for an extraordinary general meeting in accordance with articles of association. For calling extraordinary general meeting 14 or 21 days prior notice must be sent to every member of the company. If the company desires to pass ordinary resolution 14 days prior notice must be sent to every member and if the company desires to pass special resolution 21 days prior notice must be sent to every member of the company. Class Meeting There is another type of meeting known as class meeting might be held by the company. Class meeting is held for a specific class of shareholders for example preference shareholders. Class meeting might be held for specific purpose such as for variation of a class right. RESOLUTION: Companies hold different meeting to decide different matters related to the company business and to pass different resolution. Companies basically pass the following two types of resolutions: i. ii. Ordinary resolution Special resolution

Ordinary Resolution Ordinary resolution is passed at the general meeting by simple majority votes by the members present at the meeting. Simple majority vote means 51% or more votes. If 51% or more members are present at the general meeting vote for the resolution an ordinary resolution can be passed. Special Resolution Special resolution is passed by three-fourth majority votes by members present at the meeting. For passing special resolution 21 days prior notice must be issued to every member of the company. The notice must mention the purpose of calling the meeting. Proceedings at the General Meeting At the general meeting proceedings of the meeting must be observed. Proceedings mean the procedure to be followed in the general meeting. The proceedings in the general meeting are as follows: i. Issuing notice for the meeting Before the meeting is held a notice should be sent to each and every member of the company. It is fundamental right to every member to receive notice of the meeting. 21

DR. MD. ABDUL JALIL, COMPANY LAW, 2013 3 days or 14 notice should be sent depending on the type of the resolution to be passed. If the company decides to pass special resolution 21 days prior notice should be sent to the members. If the company decides to pass ordinary resolution, 14 days prior notice should be sent to the members. ii. Quorum The general meeting must fulfill the quorum requirement if it wants to pass any resolution. To pass any resolution in the general meeting, there must have at least two members present at the meeting. Two members will make the quorum. Less than two members present at the meeting cannot make pass any resolution. iii. Chairman There must have a chairman of the general meeting who will preside over the meeting. Usually, the chairman of Board of Directors becomes the chairman of the general meeting. In the absence of the chairman, the members present at the meeting may appoint any member whom they think suitable and qualified may make chairman of the meeting. The function of the chairman is to make sure that the meeting is conducted properly and in accordance with the rules. iv. Voting Right The members present at the general meeting has right to vote when any resolution is passed. The members may vote in person or through proxy. A member may appoint a proxy who can vote at the general meeting on his behalf as his agent. Voting right is a fundamental right to every member. If any member is not issued notice for a meeting and he is absent in the meeting due to ignorance of the meeting and in that meeting any resolution is passed, he can challenge the validity of the resolution passed, even he can file a petition in the court to set aside the resolution passed. In Pender v. Lushington (1877) 6 Ch. 70, the Court of Chancery in England held that a denial of a members voting right at the general meeting amounts to an infringement of his personal right in respect of which he can maintain personal legal action in the court. v. Resolution of the meeting A general meeting is held to pass a resolution. A company may pass two types of resolutions in the general meeting such as ordinary resolution and special resolution. To pass ordinary resolution simple majority vote is needed and to pass special resolution three-fourth majority votes needed. vi. Minutes of the meeting The minutes of the general meeting must be written down and sign by the chairman. All minutes of general meetings must be kept in the minutes book which is kept by the secretary of the company in the companys office. Every member has a right to have access to the minutes of the meetings and may have a copy with reasonable fees.

DR. MD. ABDUL JALIL, COMPANY LAW, 2013 4 If the above proceedings are followed at a general meeting, we can say that the meeting has been a valid meeting. A valid meeting is a meeting which is convened, constituted and conducted properly. Irregularities or defects in proceedings will not make the meeting or resolution invalid unless the court is of the opinion that substantial injustice has been caused which may not be remedied by an order of the court. Validity of the resolution passed To pass a valid resolution the meeting must make sure that it follows all the proceedings and requirements make the meeting and resolution valid. If minor irregularities or defects are found, the court usually does not hold the resolution invalid. However, if the court is of the opinion that there has been failure of justice for irregularities and for not complying with the proceedings of the meeting, the court my declare the resolution passed as invalid and may order to set aside the resolution passed. A proceeding passed under the Companies Act 1965 (Malaysia) may not be invalidated just because of any procedural irregularity. Section 355(1) of the Act provides: No proceeding under this Act shall be invalidated by any defect, irregularity or deficiency of notice or time unless the court is of the opinion that substantial injustice has been or may be caused thereby which cannot be remedied by any order of the court. Importance of having meeting and passing resolutions It is very important to hold different types of meeting whenever needed. Statutory meeting and Annual general meeting are compulsory for companies. The purpose of holding meeting is to pass different types of resolution and passing resolution is important to accelerate the business activities. However, the resolution passed must be valid and just for all stakeholders in the company. Meetings and Resolutions: An Islamic Perspective Resolutions are passed by way of mutual consultation (shurah) of directors or members of the company. Allah (s.w.t.) has asked people to take decision through shurah. Allah says in Surah Ash-Shura (42): 38 that: Waamruhum shura bainahum which means the believers make their decision through mutual consultation (shura). Islam accepts meetings and resolutions passed if proper procedure is followed. The court can set aside the resolution passed if it causes injustice to shareholders and other stakeholders. Example: Surah An-Nisa (4): 58, 135; Surah Al-Araf (7): 29. Surah al-Hujurat (49): 9-10. In a hadith prophet (s.a.w.s.) said: The man who is most hateful to Allah is the one who quarrels and disputes most. (Bukhari; Muslim). So, the members of a company should not quarrel and dispute while making any resolution. They need to pass resolution peacefully by following the rules and regulations.

DR. MD. ABDUL JALIL, COMPANY LAW, 2013 5 The information presented in the general meeting must be accurate, true and fair. In this regard prophet (s.a.w.s.) said in a hadith that: Truthfulness leads to righteousness and righteousness leads to paradise. In addition, a man keeps on telling the truth untill he becomes a truthful person. Falsehood leads to wickedness and evil-doing and wickedness leads to the (Hell) fire and a man may keep on telling lies till he is written before Allah as a liar. (Sahih al-Bukhari). The members of a company have right to protest against any resolution passed which goes against the interest of minority shareholders. In this regard prophet (s.a.w.s.) said in a hadith that: Whoever among you sees something abominable should rectify it with his hands; and if he has not strength enough to do it, then he should do it with his tongue and if he has not strength enough to do it, then he should abhor it from his heart and that is the least of faith. (Sahih Muslim, Sunan Tirmidhi and Sunan Ibn Majah). If any corruption is committed by any director it is the duty of every director and the auditor to expose it to the members of the company. In this regard Imam al-Nawawi stipulated that: One who is not to be exposed must be a person who is not known for harmfulness and corruption. But if he is corrupt, it is advisable that such a person is to be exposed. If his corruption is not exposed, he will be encouraged to do more harm, corruption and violation of what is inviolable as well as embolden others to follow the suit. So, he must be reported to authorities if an evil that is entailed by such reporting is not feared. The above statement of Imam al-Nawawi is relevant for both chapter 11 and 12.