COMPANIES AND ALLIED MATTERS ACT (CAMA), 2020; EXPLORATION OF COMPANY MEETINGS
Author: O. M. Atoyebi S.A.N FCIArb. (U.K.)., Contributor: TOBENNA MOGBO
According to the defining law in Nigeria, a company can be founded by one, two, or more people. It can also be described as a body formed and incorporated as a legal entity apart from the individual partners that make up the firm. A group of people can organize a legal organization called a corporation to conduct and manage a commercial or industrial venture. Similarly, a company that has been created and registered under this Act (CAMA), or one that was already in existence when this Act took effect in Nigeria is referred to as a “Company” or an “existing company”.
It is important to keep in mind that the people participating in the management of an incorporated legal entity which are the members are also referred to as the organizational structure, since they aid the company in achieving its objectives and goals.
Thus, Meetings are held to establish strategic plans that will help the organization accomplish its goals and to keep the members of the company informed about the firm’s activities. In other words, meetings continue to be a means of aiding a business’s decision-making process. The Companies and Allied Matters Act 2020 has codified meetings that are to be held by Companies registered under the Act. There are 3 types of meetings;
A. Statutory Meeting.
B. Annual General Meeting (AGM).
C. Extraordinary Meeting.
The primary goal of this article is to highlight the number of meetings that a company must hold in order to comply with the law.
Generally, meetings are called to debate and deliberate on issues impacting the company’s members and management. The gathering of the company’s members is also known as the General Meeting.
Categories of General Meetings
According to the Companies and Allied Matters Act, 2020 (CAMA), the types of general meetings that can be convened are:
- Statutory Meeting
Within six months after their establishment, Public Limited Companies are solely mandated by law to hold this meeting[1] [1]. The meeting’s objective is to evaluate and debate issues raised by the firm’s statutory report as well as any problems related to the organization of the company and the start of operations[2] [2]. The directors are mandated to at least 21 days before the statutory meeting, forward the statutory report to every member of the company, the Statutory Report must be duly certified by not less than two directors and also deliver a copy to the Corporate Affairs Commission for registration. The statutory report contains the following information:
a. The total number of shares allotted by the company;
b. The total amount of money received in respect of the shares allotted;
c. The names, addresses, and descriptions of all the directors, managers and secretaries;
d. Particulars of pre-incorporation contracts together with any modifications;
e. Any underwriting contract that has not been carried out and the reasons thereof;
f. The particulars of commissions or brokerage paid in connection with the sale of shares.
g. An abstract of the receipts of the company and of the payments made from them up to date.
Failure to hold Statutory Meeting or deliver Statutory Report would result in the company and any officer in default being guilty of an offence and liable to a fine as may be fixed by CAC.[3] [3] It is pertinent to note that this meeting must be held compulsorily in Nigeria.
- Annual General Meeting (AGM)
A company should hold its first Annual General Meeting within 18 months of incorporation[4] [4]. Subsequently, the AGM should be held within a space of 15 months after each AGM, this is done just once a year. Apart from the first AGM the Corporate Affairs Commission can extend the time of holding any AGM by not more than 3 months[5] [5]. The ordinary businesses conducted at annual general meetings are;
a. Declaration of dividends;
b. Presentation of financial statements and reports of directors and auditors;
c. The election of directors in place of those retiring; the appointment and fixing of remuneration of auditors; and
d. The disclosure of remuneration of managers of a company.
While the special businesses conducted are any other business not listed as an ordinary business, an example is Increase and Reduction in Share Capital. It must also be held in Nigeria.
- Extraordinary General Meeting
This meeting is the General Meeting held at any time to transact businesses that cannot conveniently wait for the next AGM, it can hold at any time and need not be held in Nigeria[6] [6]. They can be organized by the board of directors or any member or members of the company holding not less than one-tenth of the company’s paid-up capital or voting rights.
Businesses transacted at Extraordinary meetings shall be deemed to be ‘SPECIAL BUSINESS’[7] [7].
There are nonetheless gatherings that are not for the Company’s General Members. These meetings are;
a. Board of Directors Meeting: The Board of Directors shall hold meetings from time to time, provided that the first meeting of the Board of directors is to be held not later than 6 months after the incorporation of the company[8] [8]. Agendas of the first board meeting are election of the Chairman from among the directors, the appointment of auditor, appointment of Secretary etc.
b. Court Ordered Meeting: The Court may from time to time on the application of the shareholders or their personal representatives or the creditors of the company, order for meetings.
Other provisions that are Noteworthy from the Companies and Allied Matters Act.
i. Notice of Meeting:
For any meeting to be valid, adequate notice must be given to persons who are entitled to attend the meeting, no business may be transacted at any general meeting unless notice of it has been duly given[9] [9].
ii. Contents of Notice of Meeting:
The place, date and time of the meeting, the type of meeting, Agenda of the meeting, for example, if it is for Annual General Meeting or for Special Business[10] [10].
iii. Person entitled to Receive Notice:
Every Member, Legal representative, Receiver or Trustee in bankruptcy of a member, every director of the company, every auditor of the company[11] [11] etc.
iv. Length of Notice:
The notice required for all types of general meetings shall be 21 days from the date on which the notice was sent out. However, a shorter notice may be agreed upon by all the members entitled to attend and vote at the annual general meeting[12] [12]. Note the exception is that every public Company shall at least 21 days before any General meeting advertise a notice of such meeting in at least two daily newspapers[13] [13].
v. Quorum of the Meeting:
This means the total number of members that can validly hold a meeting of the company. For the purpose of determining a quorum, all members of the company or their proxies shall be counted. Quorum is determined as follows; unless otherwise provided in the articles; the quorum of a meeting shall be 1/3 (one-third) of the total number of members of the company or 25 members present in person or proxy. Where the number is not a multiple of 3, then the number nearest to 1/3. Where the number of members is 6 or less, the quorum shall be 2 members[14] [14].
vi. Minutes of the Meeting:
Every company (except for companies with one shareholder) shall keep of all proceedings of general meetings, board meetings and meetings of its managers, where there is a default, the company and every officer in default shall be guilty of an offence and liable to a fine as may be determined by CAC[15] [15], The minutes must be duly signed by the chairman. The minute book shall be kept at the registered address of the company and shall be open to the members for inspection without charge[16] [16].
CONCLUSION
Meetings play a crucial role in the sustainability of any corporate entity, whether big or small. The idea behind meetings is to ensure that Company’s activities are accountable and in compliance with regulatory compliance requirements. Thus, it is necessary that Companies comply with the provisions of the Law on matters of meetings, inclusive of its conduct and the decisions made therein.
[1] Section 235 CAMA
[2] Section 238(8) of CAMA
[3] Section 236 and 408
[4] Section 237
[5] Section 238
[6] Section 239
[7] Section 239(8)
[8] Section 289(1)
[9] Section 241 CAMA
[10] Section 242
[11] Section 243
[12] Section 241
[13] Section 246
[14] Section 256 of CAMA
[15] Section 266 of CAMA
[16] Section 267 of CAMA