Companies Act 1965 requires a company, whether privately or publicly, to hold an Annual General Meeting every calendar year, but not more than 15 months after the last Annual General Meeting. We are spotting that private companies holding annual general meetings, especially minority shareholders or family business, holding annual general meetings of shareholders may be heavy and expensive, the new act removes this requirement from private companies.
Under the 2016 Companies Act, the requirements of the Private Company Annual General Meeting have been repealed. This means that private companies no longer need to hold annual general meetings every calendar year. All meetings of a private company are called affiliate meetings. However, the requirements of listed companies on Annual General Meeting remain.
Cancellation of the AGM will mean that the auditors’ election, the election and retirement of directors, the submission of audited financial statements and the submission of annual reports will be handled separately and not with the private company holding the annual general meeting. Members are still entitled to audit financial statements and, although they do not have the benefit of the general meeting, they can discuss and challenge the directors on these statements.
However, the Companies Act 2016 allows members holding at least 5% paid-up capital in private companies to request directors to convene an actual meeting. It has been more than 12 months to convene a meeting1 and the proposed resolution is not defamatory, lenient or unreasonable, or not in the best interests of the company. For private companies, matters normally considered at general meetings will be dealt with the accounts will be distributed and submitted within six months of the end of the financial year Commission Companies Act will not circulate within a month, the auditors may be appointed by the board of directors and then approved by the members passed ordinary resolution and the retirement and election of directors may be decided by the members by resolution written resolution.
The private company will turn to written resolution regimes, it just only applies to private companies. The companies act 2016 will remove the requirement of members’ common agreement to written resolutions of private companies. Written resolutions should be adopted within a period of 28 days from the date of issue of the majority of the qualified members. Written resolutions are adopted in accordance with the prescribed majority as if passed at the actual meeting. This means that if the written resolution is an ordinary resolution, a simple majority who qualifies for a vote is enough to pass the resolution2. Written resolution cannot use in all resolution, example, when the company wants to remove a director or auditor cannot be passed by written resolution due to this is must be passed by the ordinary resolution with the special notice and after removed must inform the Registrar within 14 days.
After reform will actually affect the shareholders’ decision-making process will be ease and speed up. One of the problems caused by this change is that most people may abuse this flexibility, which may undermine the interests of minority shareholders. At the actual meeting, all of the shareholders can explicit his opinions and reviews so that it will acquire the support of different shareholders so that the procedure of a written resolution replaces the annual general meeting may deprive shareholders of this opportunity.