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Company meetings are a requirement for all companies in Malaysia to decide on matters that require the input of the company members. This ultimate guide provides a brief overview of the three types of shareholder meetings in Malaysia.
Let’s start with the different types.
Types of shareholder meetings
There are four types of shareholder meetings in Malaysia, which are:
- Annual general meeting
- Extraordinary general meeting
- Class meetings
Annual general meeting
The annual general meeting (AGM) is arranged for shareholders to discuss any matters related to the company’s affairs and business and interact with the company directors. The AGM is also known as the annual shareholders meeting.
When are annual general meetings held?
All new companies in Malaysia must hold the first AGM within 18 months after the its incorporation date.
After the first AGM, the meeting must be held each calendar year and must not be held more than 15 months after the last AGM.
Who can call the meeting?
An AGM can be called by two or more members who own at least 10% of the company’s share capital.
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Purpose of annual general meetings
Ordinary business matters that are usually discussed at an AGM include the following:
- Appointment of new directors
- Election of directors to replace those who are retiring
- Declaration of dividends
- Remuneration of directors
- Appointment, re-appointment and fixing the remuneration of auditors
- To receive the audited financial statements for the financial year-end
The following resolutions are considered special business:
- Authority for the company to purchase its own shares
- Issue and allot shares in the company
- Approval to continue in office as independent directors
- Shareholders’ mandate for recurrent related party transactions
Factors to be considered before the annual general meeting
Before calling the AGM, factors to consider are:
- Subsidiary location: If the articles of association provide for subsidiary locations for shareholder to participate in the AGM, the articles should also consider how control is exercised over participants at the subsidiary locations
- Right to vote: Shareholders who participate in the meeting from a different venue using technology must be able to vote in accordance with the voting rights under section 71 of the Companies Act.
- Meeting notice: Public company’s AGM must be called by a written notice not less than 21 days, and for private companies, the meeting shall be called by a notice of at least 14 days, according to section 316.
Ordinary and special resolutions
Before the AGM’s notice is approved, the board of directors must determine whether the resolution is an ordinary or special resolution.
An ordinary resolution is a resolution passed at a meeting on a show of hands is passed by a simple majority if it is passed by members representing a simple majority of members who are present at the meeting (section 291(2)).
An ordinary resolution is passed on a poll taken at a meeting if it is passed by members representing more than half of the total voting rights of the members who are entitled to vote and do vote in person or by proxy on the resolution (section 291(3)).
A special resolution is passed at a meeting on a show of hands is passed as a special resolution if it is passed by not less than 75% of the members who are present at the meeting (section 292(3)).
A special resolution is passed on a poll taken at a meeting if it is passed by members representing not less than 75% of the total voting rights of the members who are entitled to vote and do vote in person or by proxy on the resolution (section 292(4)).
Extraordinary general meetings
An extraordinary general meeting (EGM) is a general meeting that is not the AGM and can sometimes be referred to as special general meetings or emergency general meetings. The EGM is used to discuss urgent matters such as important legal matters and the removal of important company members.
Similar to AGMs, ordinary business matters and special business matters are discussed at the EGM.
When must extraordinary general meetings be held?
There are no requirements regarding when the EGM must be held in Malaysia and there is no punishment for not holding an EGM.
The EGM can take place on any day during the company’s official business hours.
Who can call the meeting?
An EGM can be called by two or more members who own at least 10% of the company’s share capital. If the company does not have share capital, two or more members who own at least 10% of voting rights may call the meeting.
Arranging the extraordinary general meeting
Before an EGM can be held, an official request must be made. The request can be made by the company members or shares who own at least 10% of share capital or 10% voting rights.
Once the summoning of the EGM is confirmed, the board of directors must provide a notice that an EGM will be held. The notice musts contain the EGM’s objectives and be signed by all members who request the holding of the EGM.
After the request has been submitted, the company directors must decide whether to approve or reject the EGM. Even if the directors deny the EGM, members representing more than half of the voting rights can convene the EGM.
Members who called the EGM and directors can choose who they want to join the EGM.
Class meetings
A class meeting is a shareholder meeting for companies that issue different classes of shares that only holders of a class of shares can attend and vote.
Classes of shares in Malaysia are categorised into two classes which are the ordinary shares and preference shares.
Companies hold class meetings when the rights of the holder of a class of shares are to be altered, varied or affected. Only matters that concern a certain class of shares can be discussed.
For example, if the company wants to change the voting rights of preference shares, only preference shareholders will be able to attend and vote in the meeting.
Directors’ meetings in Malaysia
The company directors run and operate the day-by-day affairs of the company, and directors are to make all decisions for the company except for choices that are decided by the shareholders.
Matters discussed at the directors’ meeting include:
- Recommending dividends
- Transfer of shares
- Appointing, removing or resignation of directors
- Direction of the company
- Company’s performance
Conclusion
The three types of shareholder meetings and directors’ meeting in Malaysia, as listed above, are crucial to the company’s management. Contact Acclime to ensure your company complies with the regulations and laws.
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About Acclime.
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