Three types of shareholder meetings in Malaysia.

In Malaysia, public companies must convene different types of shareholder meetings to address various corporate matters and ensure shareholder involvement in key decisions. The three main types are Annual General Meetings (AGMs), Extraordinary General Meetings (EGMs) and Class Meetings. Each serves a distinct purpose and is governed by specific provisions under the Companies Act 2016 and the company’s constitution. Understanding the differences between these meeting types is essential for maintaining compliance and ensuring transparent, effective corporate governance.

This article provides an in-depth exploration of these three types of shareholder meetings in the context of Malaysia’s corporate environment.

Legal framework

Before delving into the specifics of each meeting type, it is important to understand the legal framework governing shareholder meetings in Malaysia:

• Companies Act 2016: This is the primary legislation governing corporate affairs in Malaysia, including provisions for shareholder meetings.
• Listing Requirements of Bursa Malaysia Securities Berhad: For public listed companies, these requirements stipulate additional rules and best practices for shareholder meetings.
• Malaysian Code on Corporate Governance: This provides guidelines on best practices for corporate governance, including aspects related to shareholder meetings.
• Company constitution: Each company’s constitution (formerly known as Memorandum and Articles of Association) may contain specific provisions regarding shareholder meetings.

Annual General Meeting

The Annual General Meeting (AGM) is a mandatory yearly gathering of a company’s shareholders and directors. It serves as a platform for the company to present its performance, make key decisions and engage with shareholders.

Under Section 340 of the Companies Act 2016, every public company in Malaysia is required to hold an AGM each calendar year, ensuring that within six months of the company’s financial year-end and no more than 15 months after the last preceding AGM. For newly incorporated companies, the first AGM must be held within 18 months of the incorporation date.

Notice of the AGM must be sent to all shareholders, directors and auditors at least 21 days before the meeting. An AGM can also be called by two or more members who own at least 10% of the company’s share capital. The meeting can only proceed if a quorum is present, as defined in the company’s constitution.

Resolutions are typically passed by a simple majority, either by a show of hands or by poll, and detailed minutes must be recorded and kept at the registered office. The company must also file its financial statements with the Companies Commission of Malaysia (SSM) within 30 days after the AGM.

The AGM typically covers the following matters:

• Presentation of audited financial statements
• Declaration of dividends
• Election/re-election of directors
• Appointment of auditors
• Directors’ fees
• Other ordinary business

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 Meeting

An Extraordinary General Meeting (EGM), also known as a Special General Meeting, is a shareholder meeting held outside the regular schedule of AGMs to address specific issues that require immediate attention or shareholder approval. Section 311 of the Companies Act 2016 provides for the convening of EGMs.

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 a share capital, two or more members who own at least 10% of voting rights may call the meeting.

EGMs can be held as needed and may occur multiple times a year. They can be called at any time throughout the year to address urgent or significant matters that cannot wait until the next AGM.

The company must provide at least 14 days’ notice to all shareholders, or 21 days if a special resolution is involved. This notice must clearly state the date, time, venue and agenda of the meeting.

Similar to AGMs, a quorum must be present for the meeting to proceed. Resolutions proposed at EGMs are passed either by a simple majority or, in the case of special resolutions, by a 75% majority. Detailed minutes of the EGM must be recorded and maintained at the company’s registered office.

EGMs are called to address specific matters that cannot wait until the next AGM, such as:

• Changes to company constitution
• Major corporate actions
• Share issuances
• Removal of directors
• Appointment of directors
• Capital reduction

Class Meetings

Class Meetings are specialised shareholder meetings held for a specific class of shareholders when a company has different classes of shares (e.g., ordinary shares, preference shares). The requirement for Class Meetings is typically specified in the company’s constitution and is also provided for in Section 339 of the Companies Act 2016.

Class Meetings are held as needed when matters arise that specifically affect a particular class of shares. Only shareholders belonging to the affected class are entitled to attend and vote at these meetings. Each class of shareholders votes separately on matters affecting their rights, and voting often requires a higher threshold for approval, such as 75% of the votes cast by shareholders of that class.

Class Meetings can be convened by the board of directors or by shareholders holding at least 10% of the issued shares of that class. The quorum requirements are typically outlined in the company’s constitution.

The company must provide at least 14 days’ notice to the relevant shareholders for public companies, or 21 days if the meeting involves special resolutions. Detailed minutes of the Class Meeting must be recorded and kept at the registered office.

Class Meetings are called to address matters that specifically affect the rights of a particular class of shareholders, such as:

• Variation of class rights
• Issuance of new shares
• Share class conversion
• Redemption of preference shares

Comparison of shareholder meeting types

Challenges and considerations

As companies navigate these different types of shareholder meetings, they may face several challenges:

• Companies must encourage active participation and ensure that shareholders clearly understand the issues being discussed.
• They need to effectively manage the complexities of proxy voting, which can be particularly challenging when dealing with institutional investors.
• Adapting to the growing use of virtual or hybrid meeting formats requires companies to maintain accessibility while ensuring fair and inclusive participation.
• Balancing the interests of majority and minority shareholders, particularly during Class Meetings, is essential for equitable decision-making.
• Companies must adhere strictly to legal requirements and best practices relevant to each type of shareholder meeting to remain compliant.
• It is important that companies provide clear, comprehensive and timely information to all shareholders in advance of meetings.

Conclusion

Understanding the nuances of Annual General Meetings, Extraordinary General Meetings and Class Meetings is crucial for companies navigating the Malaysian corporate landscape. Each type of meeting serves a distinct purpose in corporate governance, shareholder communication and decision-making processes.

As Malaysia’s corporate governance framework continues to evolve, companies must stay abreast of best practices and regulatory requirements related to shareholder meetings. By effectively utilising these different meeting types, companies can foster transparency, engage shareholders and make informed decisions that drive long-term value creation.

How Acclime can help manage your company’s shareholder meetings

Acclime can assist companies in seamlessly managing these meetings by providing expert guidance on adhering to the Companies Act 2016, Listing Requirements of Bursa Malaysia Securities Berhad and the Malaysian Code on Corporate Governance. Additionally, Acclime offers tailored solutions to address specific challenges, such as proxy voting management and adapting to virtual meeting formats, ensuring that companies maintain regulatory compliance while promoting transparent and effective shareholder engagement.