Shareholders own the company, but they don't run it day-to-day - that's the directors' job. So how do shareholders exercise their power? Through meetings and resolutions. Think of it like democracy: shareholders vote on the big stuff, while the board handles everyday decisions.
This topic covers the mechanics: when meetings must be held, how to call them, who can vote, what majority you need, and when you can skip the meeting entirely and just pass a written resolution. Get these procedures wrong, and your resolution might be invalid - so the detail matters.
There are different types of shareholder meetings, each with its own purpose and rules. The main ones you need to know are: Annual General Meetings (AGMs), general meetings, and class meetings.
Here's a key difference: PUBLIC companies MUST hold an AGM each year (s.336 CA 2006). Private companies DON'T have to - they can if they want, but there's no legal requirement. This is a major simplification for small businesses.
Public companies must hold an AGM within 6 months of their accounting reference date (year-end). Failure to do so is a criminal offence for every officer in default.
At an AGM, shareholders typically: receive the annual accounts, appoint or reappoint auditors, appoint or re-elect directors, approve final dividends, and raise any other business. It's the annual health check where shareholders can question the board face-to-face.
AGM = Annual for plcs. Private companies are free to skip it. Think: "Public companies are in the Public eye - they need annual meetings."
Any meeting of shareholders that isn't an AGM is simply called a general meeting (GM). These can be called whenever needed - to approve a major transaction, remove a director, change the articles, or deal with any business requiring shareholder approval.
Both public and private companies can hold general meetings. For private companies (with no AGM requirement), general meetings are how they handle business that needs a formal vote rather than a written resolution.
If a company has different classes of shares (ordinary, preference, etc.), sometimes you need a meeting of just one class. This happens when you're varying the rights attached to that class - the affected shareholders meet and vote separately.
Under s.630 CA 2006, varying class rights requires consent of 75% of that class (either in writing or by special resolution at a class meeting). You can't just outvote a minority class in a general meeting - they get their own say.
Directors can call a general meeting whenever they decide one is needed. But what if shareholders want a meeting and the directors won't call one? Shareholders have their own power.
Shareholders holding at least 5% of paid-up voting shares can REQUIRE the directors to call a general meeting. Directors must then call the meeting within 21 days, to be held within 28 days of the notice.
If directors ignore a valid requisition, the shareholders who made it can call the meeting themselves (s.305) and claim reasonable expenses from the company. The company can then recover those costs from the defaulting directors.
The court can also order a meeting under s.306 if it's 'impracticable' to call one the normal way - for example, if there's deadlock on the board or quorum requirements can't be met.
You can't just spring a meeting on shareholders. They need proper notice to prepare, arrange to attend, or appoint a proxy. The notice period depends on the type of company and meeting.
| Meeting Type | Notice Required | Section |
|---|---|---|
| Private company - any meeting | 14 clear days | s.307(1) |
| Public company - AGM | 21 clear days | s.307(2)(a) |
| Public company - other meetings | 14 clear days | s.307(2)(b) |
"Clear days" means you don't count the day of sending or the day of the meeting. So 14 clear days notice for a meeting on the 20th means notice must be given by the 5th at the latest.
Shareholders can agree to shorter notice. For private companies, shareholders holding 90% of voting rights can consent (or 95% for AGMs). For public companies, 95% must consent. This allows urgent meetings when everyone agrees.
The description of business must be accurate. If notice says you're approving accounts but you actually vote to remove a director, that resolution would be invalid - shareholders weren't properly informed.
A meeting isn't valid unless enough people attend - that's the quorum. The default under s.318 is TWO qualifying persons (members or proxies). But here's an important exception: a single-member company can have a quorum of one.
The articles can specify a higher quorum, which is common in companies with multiple shareholders who want to ensure broad participation in major decisions. Check the articles - the default is just the minimum.
If a quorum isn't present within half an hour of the scheduled start, the meeting is typically adjourned. No business can be validly transacted without quorum - any purported resolutions would be void.
There are two ways to vote at a meeting: show of hands (the default) and a poll. They work very differently, and the difference can change the outcome entirely.
On a show of hands, each person present gets ONE vote regardless of how many shares they hold. A shareholder with 1 share has the same voting power as one with 1 million shares. It's quick and simple for routine matters.
On a poll, votes are counted according to shareholding - one share, one vote (or as the articles specify). This reflects economic reality: bigger shareholders have more say. Polls must be allowed and can't be excluded (s.321).
Any provision in articles is void if it excludes the right to demand a poll (except on electing a chairman or adjourning). At least 5 members, or members with 10%+ voting rights, can demand a poll.
The difference matters! On a show of hands, 3 small shareholders beat 1 major shareholder. On a poll, the major shareholder with 60% of shares wins. Always consider which voting method applies.
Can't make the meeting? Appoint a proxy to attend and vote for you. Under s.324, every shareholder has the right to appoint a proxy - any provision in articles purporting to deny this right is void.
A proxy can speak at the meeting, vote on a show of hands (unless articles say otherwise), and vote on a poll. For public companies, shareholders can appoint multiple proxies for different shares.
Proxy forms must be received at least 48 hours before the meeting (or as articles specify, but not more than 48 hours). The notice of meeting must tell shareholders about their proxy rights.
Shareholder decisions are made by resolution. There are two main types: ordinary resolutions (simple majority) and special resolutions (75% majority). The type required depends on what you're deciding.
An ordinary resolution passes with a simple majority - more than 50% of votes cast. It's the default type: if the Act or articles don't specify what type is needed, an ordinary resolution will do.
A special resolution needs at least 75% of votes cast in favour. It's required for fundamental changes - things that significantly affect the company's constitution or structure.
Holding over 25% of voting shares means you can block any special resolution. This is a powerful position - you can veto amendments to articles, capital reductions, and other major changes.
| Feature | Ordinary | Special |
|---|---|---|
| Majority needed | >50% | ≥75% |
| Blocking minority | >50% | >25% |
| File at Companies House? | Usually no | Always yes |
| Notice of full text? | No | Yes |
| Used for | Routine matters | Fundamental changes |
Private companies have a fantastic shortcut: written resolutions (ss.288-300 CA 2006). Instead of calling a meeting, you circulate a document and shareholders sign to indicate their agreement. No meeting needed!
Written resolutions are NOT available to public companies. They must hold actual meetings for shareholder decisions. This reflects the wider shareholder base and need for deliberation.
The same majorities apply: ordinary written resolution needs simple majority of total voting rights, special written resolution needs 75% of total voting rights. Note: it's total voting rights, not just those who respond.
A written resolution lapses if not passed within 28 days of circulation (or as articles specify). Once enough shareholders have signed, the resolution is passed - you don't need everyone to respond.
Not all resolutions need to be filed, but special resolutions ALWAYS do. They must be filed within 15 days of being passed. This makes sense - they're fundamental changes that third parties might need to know about.
For certain sensitive resolutions, the person affected gets 28 days' warning that the resolution will be proposed. This is 'special notice' under s.312 - not to be confused with special resolutions (different thing entirely!).
The procedure: shareholders give 28 days' notice to the company that they intend to move the resolution. The company then includes it in the meeting notice. The director or auditor has the right to make representations.
Here's a practical reality: if ALL shareholders agree to something, do you really need the formality of a meeting? The courts say no. The 'Duomatic principle' allows unanimous informal agreement to be as effective as a formal resolution.
[1969] 2 Ch 365
Directors paid themselves remuneration without formal shareholder approval. All shareholders informally agreed to the payments.
Where all shareholders with voting rights ASSENT to a matter within the company's powers, their informal agreement is as binding as a resolution passed at a general meeting.
The Duomatic principle: unanimous informal shareholder consent can substitute for a formal resolution, provided all shareholders with voting rights agree.
Duomatic only works if: (1) all shareholders assent, (2) they know all material facts, (3) the matter is within the company's powers. It doesn't work for things requiring external filing or where third-party rights are affected.
Someone needs to run the meeting - that's the chairman. Usually the articles specify who chairs (often the board chairman). If not, the members present elect someone. The chairman has important powers: maintaining order, deciding on procedure, and declaring results.
The chairman typically has a casting vote if there's a tie, though this depends on the articles. On a poll, the chairman's shares count the same as anyone else's - the casting vote is additional.
Every company must keep minutes of general meetings (s.355). These must record what was discussed and decided. Minutes signed by the chairman are evidence (though not conclusive proof) of the proceedings.
Minutes must be kept for at least 10 years. Members can request copies of general meeting minutes (not board minutes - those are private). Failure to keep proper minutes is a criminal offence.