Corporate Law Malta - Company Meetings

While a Maltese company is owned by the shareholders, it is the Board of Directors (BoD), which run the company and take decisions on certain day to day matters. The shareholders however are conferred the power to take decisions on matters regulating their relationship with each other or on certain core principles on how the company is governed as allowed under law. To make such decisions, shareholders typically meet to take such decisions in the general meetings.

General meetings are divided into:

1. Annual General Meetings (AGM); and
2. Extraordinary General Meetings (EGM)

An AGM must be held annually but need not necessarily be held on the anniversary of the previous one, although it is important to note that the period between one AGM and another cannot exceed 15 months. Having said that, provided that the company holds its first annual general meeting within eighteen months of its registration, it does not need to hold one in the year of its registration or in the following year. The Companies Act (CA) seems to confer the power of convening an AGM only on directors, however any shareholder may opt to file an application requesting the court to order that it be convened, held and conducted as it deems appropriate.

At an AGM, the business discussed need not necessarily be related to the ‘ordinary’ business of the meeting. Therefore, throughout this meeting, business may be transacted which goes beyond declaration of dividends, the consideration of the company’s annual accounts and the reports of directors and auditors, the election of directors instead of those retiring and the appointment of auditors together with the delineation of their remuneration. No limit is set on the type of business which may be transacted at an AGM, provided that the business discussed is pertinent to such AGM.

Moreover, the CA mandates that a company is to ensure to that, not fewer than 14 days before the date of the AGM at which accounts are to be laid, a copy of said accounts is divulged to:

1. All members of the company;
2. All holders of debentures within the company;
3. All other persons entitled to receive notice of general meetings.

Where a copy of the annual accounts is sent fewer than 14 days prior to the meeting, it shall be considered to have been sent, provided that an agreement in this regard would have been reached by all eligible members who received them later than prescribed.

On the other hand, in relation to the EGM, the CA does not explicitly list the matters which should be discussed therein. That being said, it makes reference to two matters in a non-exhaustive manner:

1. When a resigning auditor requests an EGM to receive his notice of resignation and to consider the reasons underpinning such resignation;
2. For the purposes of a company recovery procedure. Here, where the members of a company undergoing such procedure are satisfied, during an EGM, that the company’s affairs have improved to the extent that it may pay its debts, they may submit a court application, which should be accompanied by any supporting documentation and information, confirming that they are so satisfied, and requesting the court to issue an order for the company recovery procedure to be terminated.

An EGM may also be convened by the directors, following requisition by members, on a serious loss of capital or at the request of the resigning auditor.  

Decisions are taken by shareholders through resolutions and these take the form of either ordinary or extraordinary resolutions. The kind of resolution which ought to be passed depends on the nature of the decision, not on whether the meeting is an AGM or EGM. The CA mandates that certain decisions must be taken by means of an extraordinary resolution, while the rest may be taken by an ordinary resolution.

Decisions which ought to be taken by an extraordinary resolution include the following:

1. Any decision to alter the company’s Memorandum and Association (‘M&A’), even though this is subject to some exceptions;
2. Any decision which leads a company to buy back its own shares; and
3. Any decision whereby class rights are varied.

It is important to note that the law, under article 210 of the CA, allows for resolutions to be taken validity if signed by all members of the company entitled to attend and vote at a meeting, although such resolutions cannot be taken under this article to remove a director or auditor from office.

While the law contains detailed provisions for shareholders meetings, director meetings are left to the director’s directly, with some exceptions. The powers of directors are generally exercised through the meetings of the BoD. During these meetings, the directors meet discuss the issues before them and express whether they assent or dissent. Decisions are then taken through voting as mandated under the M&A of the company. Directors do not require the level of protection granted to members or the detailed regulation applicable to general meetings.

In conclusion, the members and directors of a company meet through different meetings. The regulation of said meetings by means of the CA ensures that the company’s matters are dealt with adequately and transparently.

For further information or assistance with corporate law matters, please contact us at info@gtg.com.mt

Author: Dr Karl Cauchi