Mandatory Statutory Meetings For Nigerian Companies

A company cannot be simply defined as an organization set up to carry out business objectives, but most importantly a company is made up of the “people” who have agreed to work together to foster the goals and objectives of the company. Hence, in order to effectively carry this out, the company (board of directors and members) must make arrangements in form of meetings to agree or resolve on certain decisions in line with these goals and laid down rules and regulations.

Principle 10 of the Nigerian Code of Corporate Governance, states that Meetings are the principal vehicle for conducting the business of the board and successfully fulfilling the strategic objectives of the company. The purpose of a meeting is for deliberation, discussions and decision-making regarding the matters directly and indirectly affecting the company as a whole. According to the Companies and Allied Matters Act 2020, a company can convene meetings as it deems fit while the code of corporate governance recommends the board should meet at least once every quarter. Prior to now, board meetings were to be held physically, however due to modern technological advancements, meetings can be held virtually on the condition that all can be heard clearly and if there is the need to be seen, that all can be seen.

To convene a meeting, a notice must be authorised by the board of directors and issued by the company secretary, to give the shareholders ample time to prepare for the meeting and have the knowledge of the business to be discussed beforehand. Depending on the meeting to be held, for example, twenty-one clear days would be required for an annual general meeting and extra-ordinary general meetings

QUORUM: This is the minimum number of persons whose presence is required to constitute a valid meeting. The quorum for the board meetings is usually stated in the Articles of Association, however statutorily, the quorum should be at least two members or one-third where the number is more than six. For a general meeting, the quorum should be one-third or twenty-five members as the case may be.

PERSONS ENTITLED TO A NOTICE OF MEETING:

The following persons are entitled to a notice of meeting:

1. Members of the company
2. Company Auditors
3. Trustees in bankruptcy
4. Personal representatives of a deceased member.
5. Every director of the company.

The following are the types of statutory meetings convened in Nigerian companies:

ANNUAL GENERAL MEETING: This is a statutory meeting that every company must hold every calendar year for the purpose of transacting the ordinary business of the company. A company shall hold its first annual general meeting within 18 (eighteen) months after incorporation. Subsequent annual general meeting shall be held within 15 (fifteen) months after the previous general meeting and in such a way that an AGM is held every calendar year with reference to company’s accounting period. Also, a member may by notice, requisition an AGM where the company is in default. The NCCG recommends that general meetings should be conducted in an open manner allowing for free discussions on all issues on the agenda. Sufficient time should be allocated to shareholders, particularly minorities, to participate fully and contributed effectively at such meetings.

A company shall discuss the following ordinary business at its general meeting:

1. Declaring a dividend.
2. Presentation of a financial statements and reports of directors and auditors.
3. Election of directors in place of retiring or removed directors.
4. The appointment and fixing of the remuneration of the auditors.
5. Appointment of members of the audit committee.

Notices of general meetings shall be at least 21 days from the date on which the meeting will be held. Copies of the annual reports, audited financial statements and all other information pertaining to any resolution to be voted upon.

The chairmen of all board committees and of the statutory audit committee should be present at general meetings of the company to respond to shareholders’ inquiries. The Corporate affairs commission should receive a notice of the AGM for public companies.

STATUTORY MEETINGS: This is the first meeting which a newly registered public company must hold not less than six (6) months from the date of its incorporation. Twenty-one days before the statutory meeting, the directors must send a report called the statutory report to the members of the company. Failure to hold this meeting is a ground for winding up by the court.

EXTRA-ORDINARY GENERAL MEETINGS: As the name presupposes, the meetings are convened where the business to be discussed is urgent and necessary, and cannot be held off till the next general meeting. The board of directors are empowered by section 239 of CAMA to convene the extra-ordinary meeting under these instances:

1. As and when the directors deem such meeting necessary.
2. On the requisition of a member(s) who holds at least one-tenth of the shares carrying voting rights.
3. On the requisition of an auditor who resigns in certain circumstances.
4. In a public company, within thirty days of the directors becoming aware that the assets of the company are half (or less) of its called-up share capital.
5. In compliance with the order of a competent law court.

CLASS MEETING: Where there are more than one class of shares for instance, ordinary and preference shares, a class meeting is usually required for the particular class of shareholders to give consent to a variation to their class rights. This is done to protect the shareholders whose rights might affected by the resolution passed in a general meeting. However, this must be clearly stated in the articles of association of the company. The procedure for seeking consent is to require the consent in writing of the holders of at least three-quarters of the shares of the class, or a special resolution passed (by a three-quarter majority of votes cast) at a separate meeting of the holder of shares of the class.

Team 618 Bees

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