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If you wish a company you hold shares in to take (or not to take) a particular action, please get in touch with our corporate team today to discuss how we can assist you and your company on:
What is an Annual General Meeting (AGM)
An AGM is a general meeting of a company's shareholders, which is required to be held (under section 336 of the Companies Act 2006) by a public company within six months beginning with the day following its accounting reference date (i.e., every year, in effect).
Private limited companies have a similar requirement which can be excluded by a shareholder resolution - in the case of a private limited company, the relevant period is nine months beginning with the day following its accounting reference date.
Shareholder activism
A shareholder can require a resolution to be put forward at an AGM which has been convened. Typically, a shareholder might consider putting forward a resolution at a general meeting or AGM if the shareholder wishes for the company to take action requiring other shareholders to also provide consent.
An example of this may be if a shareholder of a company wishes to appoint or terminate the appointment of a director (and if this action requires other shareholders to provide consent, such as in circumstances where the shareholder wants the company to take action but does not hold enough shares to pass the resolution in the meeting without more support from the shareholder base of the company.
Issues where the shareholder does not hold enough shares to pass a resolution is a particular matter where the company is a public company with large numbers of shareholders each with relatively small percentages of the company's issued share capital).
Shareholder requisition of resolutions at the AGM of a Public Company
A shareholder wishing to requisition a resolution at the AGM of a public company needs to serve the requisition in line with the provisions of the Companies Act 2006 and the articles of association of that particular company.
Under section 338 of the Companies Act 2006, to qualify for the right to require that a resolution be put before the AGM, the requisition must be made by a shareholder (or a group of shareholders) that represents at least 5% of the total voting rights of all the shareholders having a right to vote on the resolution at the AGM.
Section 338 of the Companies Act 2006 outlines the requirements as to the form and content of a shareholder's requisition for a resolution, which includes that the requisition must:
- Identify the resolution being made.
- Be received by the company by six weeks before the AGM that it is to be heard (certain exceptions may apply under section 360 of the Companies Act 2006).
- Be made in either hard copy or electronic form.
- Be authenticated by the person or persons making it.
The requisition must be made within the time frame provided above. It is also important to consider any authentication requirements in the company's articles of association and section 1146 of the Companies Act 2006.
Duty of the company to circulate the resolution
Under section 338 of the Companies Act 2006, a company is required to give notice of a resolution to each of the other shareholders once it has received requests that it do so from either:
- Members representing at least 5% of the total voting rights of all the members who have a right to vote on the resolution at the AGM to which the requests relate; or
- At least 100 members have a right to vote on the resolution at the AGM to which the requests relate and hold shares in the company on which there has been paid up an average sum, per member, of at least £100.