The meetings of every company in Nigeria are a matter of law, the Company and Allied Matters Act 2020 (“CAMA”). All directors and shareholders of a company need to be abreast of their obligations in terms of the mandatory meetings that a company must hold periodically.
In this piece, we have outlined the types of meetings and other matters relating to company’s meetings under the CAMA.
What are the Statutory meetings under CAMA?
The following are mandatory statutory meetings under CAMA:
- Statutory meeting
- Annual general meeting
- Extraordinary general meeting
- Board of Directors meeting
(a) What is a Statutory Meeting?
According to section 235 of CAMA, this is the first meeting which a newly registered public company must hold not less than one (1) month and not more than six (6) months from the date of its incorporation. This is the first meeting after the incorporation of a public company. The purpose of the statutory meeting is to give members an opportunity of having a first progress report from directors and promoters. Failure to hold the meeting is a ground for winding-up but the court may instead, order that the meeting should be held and the defaulters to pay the cost. See Re Kent Outcrop Coal (1912) WN 26. The directors must at least twenty-one days before the meeting (or any shorter period agreed by all the members entitled to attend and vote), forward a report called the “statutory report” to every member of the company containing all the details provided in Section 235 (3) (a) – (g) of CAMA.
(b) What is an Annual General Meeting (AGM)?
By virtue of section 237 CAMA, this is a meeting of the directors, shareholders and members of a company which is held not later than eighteen (18) months of incorporation of a company, to transact matters that are reserved for such meeting. During the meeting, the directors and shareholders may deliberate on the company’s business matters, including passing of resolutions, appointing a new director or auditors or deal with any other matters which they deem fit.
Except in the case of a small company or any company having a single shareholder, every company operating in Nigeria is mandated each year to hold a general meeting as its annual general meeting in addition to any other meeting in that year. It is mandatory to specify in the Notice calling for the meeting that an Annual General Meeting of the company is to be held. Every AGM (after the first AGM) shall be held not later than fifteen (15) months after the last AGM.
Please note that the CAC has power to extend the time within which an AGM must hold. Please note also that if default is made in holding the annual general meeting, the commission may on the application of any member, all, or direct the calling of a general meeting and give such directions as it think fit including that one, member of the company present in person or by proxy shall be deemed to constitute a meeting which may take decisions binding on the members and may be deemed to be the AGM.
(c) What is an Extraordinary General Meeting?
Extraordinary General Meeting is a general meeting other than an AGM. Such meetings are not mandated by law but may be convened by the directors and members on requisition of a company’s member or members holding not less than one-tenth of the paid-up capital or voting right of the company in accordance with Section 239 (2) of CAMA. Please note that the right to call an Extraordinary General Meeting cannot be taken away by the Articles of Association of a company.
Where the directors fail to convene an Extraordinary General Meeting or the directors within the country are not enough to form quorum, then any director may convene an Extraordinary General Meeting in exercise of the minority right guaranteed by Section 239(2) of CAMA.
(d) What is the Board of Directors’ Meeting?
In accordance with Section 289 of CAMA, this is the meeting of directors of a company which is held to transact on matters over which the directors have power. Please note that the first meeting of the directors shall be held not later than six (6) months after the incorporation of the company.
Unless the Articles of the company provides otherwise, any question arising at any board meeting is decided by a simple majority of votes, and in case of an equality of votes, the chairman has a casting vote to settle the tie.
The quorum required for the transaction of the business of directors are a minimum of two directors where there are not more than six directors. But where there are more than six directors, the quorum is one-third of the number of directors, and where the number of directors is not a multiple of three, then the quorum is one third to the nearest number.
Please read more about directors’ meeting here: https://koriatlaw.com/ten-key-questions-on-directors-meetings-and-related-matters-in-nigeria/
What is the difference between a Statutory general meeting and an Annual general meeting?
Statutory meeting is held after one (1) month but not more than six (6) months after the company is incorporated. This is the first general meeting of the company and during the life of the company this type of meeting is held once. On the other hand, the annual general meeting is held within the first eighteen months of the company’s incorporation and, subsequently, the general meeting will be held once every year within the interval of not later than fifteen (15) months between the last and the next general meeting.
Who has the right to attend the general meeting?
According to section 107 CAMA, every member of a company has a right to attend any general meeting of the company and to speak and vote on any matter or resolution passed at the meeting, unless such a member is precluded by any outstanding obligation in accordance with the provision in the Articles of the company. A member is a shareholder or subscriber of the Memorandum and Articles of Association a Company or every other person who agrees in writing to become a member of a company whose name is entered as member in the Company’s register of members.
Where should a company hold its meetings?
As provided in Section 240 of CAMA, all statutory and annual general meetings shall be held in Nigeria with the exception of small companies and companies having a single shareholder which are permitted to meet outside the country. However, a private company may hold its general meetings electronically or virtually (using zoom, WhatsApp or Skype or Google Meet, etc.) provided that such meetings are conducted in accordance with the Articles of the company.
What length of notice is required for a general meeting?
Generally, the length of a notice required for all types of general meetings notifying all plenary members of a proposed meeting is 21 days from the date on which the notice was sent out. However, a general meeting is deemed to have been duly called, notwithstanding that it is called by a shorter notice than 21 days, if it is agreed, in the case of, –
(a) by all the members entitled to attend and vote in respect of a meeting which is called as the annual general meeting, and
(b) by a majority of the number of members having a right to attend and vote at the meeting, being a majority together holding 95% in nominal value of shares giving a right to attend and vote, or in a case of a company not having shares capital, together representing at least 95% of the total voting rights at that meeting of all the members in respect of any other meeting. See section 241 of CAMA.
What should be the content of notice of a general meeting?
According section 242 of CAMA, notice of a meeting shall specify the place, date and time of the meeting, and the general nature of the business to be transacted in sufficient detail to enable those to whom it is given to decide whether or not to attend the meeting. Where the meeting is to consider a special resolution, its term should be set out in the notice. No business may be transacted at any general meeting unless notice of it has been duly given.
Notice of meeting must contain the business to be transacted in sufficient details to provide prior information to plenary members and no business shall be transacted at any general meeting unless notice of it has been duly given. By virtue of Section 238 of CAMA, all businesses transacted at annual general meetings are deemed special business, except declaring a dividend, presentation of the financial statements and reports of the directors and auditors, election of directors in the place of those retiring, fixing of the remuneration of auditors, appointment of members of the audit committee and disclosure of remuneration of managers of company, which are ordinary business.
Who is entitled to notice of a general meeting?
The following persons are entitled to receive notice of a general meeting:
a. Every member of a company;
b. Every person upon whom ownership of a share devolves by reason of being a legal representative, receiver or a trustee in bankruptcy of a member of a company;
c. Every director of a company;
d. Every auditor for the time being of the company; and
e. The company secretary, and commission in the case of public companies. Section 243 CAMA.
What is the effect of failure to serve notice of meeting?
Failure to give notice of any meeting to a person entitled to receive it invalidates the meeting as well as the businesses transacted and the resolutions passed at such meeting unless such failure is an accidental omission on the part of the person giving the notice. For instance, HON. JUSTICE ONYEKACHI AJA, JCA said in Oteri Holdings Ltd v. Mofta West Africa Ltd & Ors. (2021) LPELR-54853 (CA) that:
“Failure to give notice of a meeting to a person entitled to receive it shall invalidate the meeting, unless such failure is an accidental omission on the part of the person(s) giving the notice”.
This was also the decision of the court in Re: Glaxosmithkline Consumer Nigeria PLC. (2019) LPELR-47498(CA).
What is the mode of effecting service of notice of a general meeting?
Section 244 CAMA provides that notice of meetings could be served to any member either personally, by post or to his registered address. Where a notice is sent by post, service is deemed to be effected by properly addressing, preparing, and posting a letter containing the notice.
Under what circumstances can the Court order a meeting of the company?
If for any reason it is impossible to call a meeting of a company or the board of directors in any manner as prescribed by the articles of the company or the companies and allied matters act. The Court may, either of its own or on the application of any director of the company or any member of the company who would be entitled to vote at the meeting, order a meeting of the company or board of directors, as the case may be, to be called or conducted in such a manner as the Court deems fit.
Section 247 CAMA and the case of Okeowo v. Migliore (1979) LPELR-2441(SC). Egbe v. George & Anor. (2021) LPELR-53503(CA) are legal basis for an aggrieved shareholder or director to approach the court for an order to call a meeting of the company especially where the majority of the shareholders or other directors are unwilling to call such meeting in pursuance of any ulterior motive.
Who presides over a meeting of companies?
As provided in section 265 of CAMA, the chairman of the board of directors shall preside as the chairman at every general meeting of the company, and if the chairman is not present within one hour after the time appointed for holding the meeting or is unwilling to act, the directors present shall elect one among themselves to be chairman of the meeting.
What is the quorum of a general meeting?
By virtue of section 256 (2) of CAMA, except in the case of a company with one member, the quorum for the meeting of company is one-third of the total number of members of the company or 25% of the members (whichever is less) present in person or by proxy, but where the number of members is not a multiple of three, then the number nearest to one third. But where the number of members is six or less, the quorum is two members and for the purpose of determining a quorum, all members or their proxies shall be counted.
What is an ordinary and special resolution?
By virtue of section 258 of CAMA, a resolution is ordinary when it has been passed by a simple majority of votes cast by members of the company, as being entitled to do so, vote in person or by proxy at a meeting, while it is special when it has been passed by at least three-fourth of the votes cast by the members of the company, as being entitled to do so, vote in person or, where proxies is allowed by proxy, at a general meeting of which not less than twenty-one (21) days’ notice specifying the intention to propose the resolution as a special resolution has been duly given.
What is the punishment for failure to hold a general meeting?
If a company fails to hold a statutory meeting within the first six (6) months of its incorporation, the company and any officer in default commits an offence and are liable to a fine for everyday during which the default continues in such amount as the CAC shall specify in its regulation. Section 236 of CAMA.
On the other hand, by virtue of section 237(5) of CAMA if a company fails to hold its annual general meeting, the company and every officer of the company are liable to a penalty in such amount as the CAC shall specify in its regulations.
