May shareholders call special meetings or act by written consent?
Yes, shareholder(s) holding at least 5 % of the share capital (or less if stated in the articles of association) of a private or public JST may request convocation of a shareholder meeting, provided that the applicants – at the date of filing the motion – hold the shares for more than three months and still hold the shares as of the time the decision on the motion is made. Further to this minimum holding period requirement, the motion must contain (i) the agenda and (ii) the resolution proposal for each item on the agenda.
As a general rule, the only way for shareholders of a private or public JST to exercise their voting rights is to attend the general meeting in person / send a proxy. Other than in a limited liability company, written resolutions in the form of circular resolutions are not available for JSTs.
The board of directors (if any) or the executive officers may call a general meeting as determined in the company’s bylaws and written consent is not permitted. General meetings may also be called:
- by the fiscal board, in the cases prescribed by law;
- by any shareholder, when the managers fail to make a timely call;
- by shareholders representing at least five percent (5%) of the S.A.’s capital stock, when the managers fail to make a timely call requested by them; and
- by shareholders representing at least five percent (5%) of the voting stock, or by those representing at least five percent (5%) of non-voting stock, when the managers fail to call a meeting for the setup of a Fiscal Board.
Calling notices must be published at the press, containing information on the place, date and time of the meeting, as well as the agenda (any proposed amendment to the bylaws must be expressly identified). Evidence of prior call may be waived if all shareholders attend the meeting, in which case the meeting is deemed as validly installed.
In addition to acting by written consent as provided above, shareholder meetings of an SA or an SCA may be convened by shareholders holding the majority of the capital after a tender offer or acquisition of a controlling block of shares or by a person named by a court upon the request of shareholders holding at least 5% of share capital (or, for a listed company, an association of shareholders holding at least 5% of capital).
For an SARL, a shareholder meeting can be convened by the manager or the statutory auditor (if one exists) at the request of at least 10% of shareholders holding at least 10% of shares or by a person named by a court at the request of any shareholder.
For an SAS, rules as to convocation of shareholder meetings by the shareholders are set out in the bylaws.
Shareholders whose combined shares amount to 5% or represent EUR 500,000 of the company’s registered share capital may demand that a special meeting is invoked.
Shareholders may not act by written consent as any resolution by the shareholders requires a shareholder meeting, but in case of a company having only a few shareholders, such a meeting can be conducted on the basis of powers of attorney.
At the request of shareholders, representing one twentieth (1/20) of the paid-up capital, to the board of directors, the board is obliged to convene an extraordinary general meeting of shareholders, setting a date for this meeting, which should not be more than 45 days from the date of the request to the chairman of the board. Shareholders may act on written consent, as described above regarding the participation methods in the resolutions of the general meeting.
Pursuant to section 569 of the Companies Ordinance, unless otherwise provided by the articles of association of a company, any two or more shareholders representing at least 10% of the total voting rights of all the shareholders having a right to vote at general meetings, may convene a general meeting if the directors fail to convene general meetings or if there are not sufficient or even no directors.
Section 548 of the Companies Ordinance allows anything that may be done by a resolution passed at a general meeting of a company, including those matters that require an ordinary resolution or a special resolution under the Companies Ordinance, to be done, without a meeting and without any previous notice, by a written resolution of the shareholders so long as all documents required to be laid at the AGM are provided to the shareholders on or before the circulation date of the written resolution (section 612 of the Companies Ordinance). Nonetheless, this provision does not apply to a resolution on the removal of an auditor or a director before the end of the auditor’s or the director’s term of office.
Any shareholder holding three percent or more of the company's voting rights for six months or longer may demand that directors call a special meeting. When the board does not call a special meeting without delay, the shareholder can obtain court permission, and once permission is obtained, the shareholder can call the special meeting for the company.
Shareholders may convene extraordinary meetings in limited and stock companies subject to certain requirements (e.g., in listed companies a 2% stake is required to request the chairman of the meeting’s board to call a meeting, whilst in private stock companies a minimum 5% stake applies).
Minority shareholders holding in the aggregate at least 3% shareholding have the right to demand the company to convene an extraordinary GMS (“EGMS”). In the case of listed companies, such right is given to minority shareholders who have continuously held at least 1.5% of the total number of issued shares for at least six months.
Individual shareholders or group of shareholders representing 10 per cent of the share capital, may request that an extraordinary shareholders’ meeting be convened. The articles of association may again contain a lower threshold.
A special meeting is a meeting of shareholders outside the usual annual meeting cycle that is called to discuss specific matters stated in the notice of the meeting. Under the laws of certain states, special meetings may only be called by the board of directors, unless otherwise provided by the certificate of incorporation or the bylaws. Most organizational documents also give the chairman of the board and the CEO the right to call a special meeting. Companies’ Constituent Documents can also allow shareholders to call a special meeting, typically by requiring the CEO or corporate secretary to call a special meeting upon the written request of the holders of a certain percentage of outstanding shares. Other states are more permissive. California, among others, requires its corporations to allow shareholders to call a special meeting upon the demand of a certain percentage of outstanding shares, frequently 10 percent. Once called, the company can schedule a meeting at its convenience, subject to most of the same notification requirements for a regular annual meeting.
In certain states, including Delaware, shareholders may act by written consent, without a meeting, if the consent is signed by the holders of shares having at least the minimum number of votes that would be necessary to authorize the action at a meeting. Companies may preclude shareholders from taking action by written consent by explicitly prohibiting shareholder written consents, or requiring unanimous written consent, in their certificate of incorporation.
Written resolution procedures are available to private companies only. For further information on how a shareholder may call a meeting or require a written resolution to be circulated, see question 21.
Shareholders holding no less than 5% of the issued shares may requisition that the board of directors call a special meeting. Subject to certain limited exceptions, upon receipt of such requisition, the board has a prescribed period of time within which it must call a shareholders meeting or the requisitioning shareholder may apply to a court to have a date set. Shareholder action may also be taken by written resolution signed by all shareholders who would be entitled to vote at a meeting.
Other than as specified under point 21 above, shareholders cannot call special meetings or act by written consent.
As it is explained in detail in Question 25, an extraordinary GA can be convened whenever required apart from the ordinary ones. In addition, a decision can also be taken in case all the shareholders give consent to the proposal of a shareholder (see Question 21).
The board must convene a shareholders' meeting at the request of shareholders representing at least one tenth of the share capital of a SA or half of the share capital of a SàRL.
Shareholders generally have the power to call extraordinary meetings where this is necessary in order to approve capital increases or decreases for example or in order to amend the company's articles of association.
Shareholder(s) owning 10% or more of the company`s shares may demand the supervisory board to call an extraordinary GM.
A shareholder may appoint a representative to act on his/her behalf at the GM based on a power of attorney. However, shareholders may not vote by written consent without being present at the meetings, except in cases of poll voting (see question 20).
The Corporations Act requires directors of a company to call and arrange to hold a general meeting which is validly requested by shareholders with at least 5% of the votes which may be cast at a meeting, or by at least 100 shareholders. In order to request a general meeting, shareholders must submit a written request to the company, setting out any proposed resolution(s) and signed by the requesting shareholders. There are limits to what is permitted with respect to resolutions proposed at shareholder requisitioned meetings. Courts have held that where a proposed resolution relates to powers vested in the board under the company's constitution, or is for some other improper purpose, the request should not be considered valid. Where a valid request is made, the shareholder requisitioned meeting must be called and concluded within two months from the date the request was provided.
A company may pass a resolution without a general meeting being held if all the shareholders entitled to vote on the resolution sign a document (i.e. a written resolution) containing a statement that they approve the resolution set out in the document. Written shareholder resolutions are common for proprietary companies, particularly those with a single shareholders and, primarily for practical reasons, less common for public shareholders given their larger shareholder base.