It’s the Annual General Meeting (“AGM”) season for many companies in Nigeria especially the banks.
Some the companies who held their AGM recently included First Registrars Ltd, Zenith Bank, Guarantee Trust Bank, Okomou Oil, etc. Many banks have held their while others have theirs around the corner. So we will be discussing the legal basics and what you need to know about AGMs.
What is an AGM and when is it held?
It is a general meeting of the shareholders in the company. Other persons, though not members, can attend a company’s AGM. Examples of such other persons are auditors and secretaries. The AGM, as the name implies, is held annually, i.e. from January to December and not more than 15 months should elapse between the date of one AGM and the next.
If a company holds its first AGM within 18 months of incorporation, it need not hold it in the year of incorporation or in the following year. Illustratively put, if company A Ltd is incorporated on 1st
October 2012. It has till 1st
of April 2014 to hold its first AGM. Also it need not hold it in 2012 or 2013. Thus the law is that firstly a company has 18 months from incorporation to hold its first AGM. Secondly, it need not hold in the year of incorporation or the following year. Thirdly, after the first AGM, the company must hold its AGM within a time bracket of 15 months (Except for banks)
Also the Corporate Affairs Commission (“CAC”) can extend the time within which a company should hold its AGM, but not by more than three months. The time for holding the first AGM cannot by extended beyond 18 months.
Where a company does not hold its AGM within the stipulated any member can apply to the CAC to direct that such a meeting be held and give such directions as it deems necessary. The danger of a company’s board to let this happen is that the CAC can order that one member of the company present in person or in proxy should be deemed to constitute a meeting and can take decisions in such meetings binding on the company.
Although, I acknowledge that in practice this may be difficult as the size and running of businesses these may make it impracticable for a single individual to hold a company’s AGM. Also failure to hold can be a ground for petition to the Court for winding up.
One thing to note is that, in calling for a meeting a notice to that effect must be issued 21 days before the date of that meeting.
Except where all members entitled to attend and vote at the meeting agree on a shorter date.
In case of an AGM the notice must state that it is an AGM.
The notice of a meeting must specify the place, date and time of the meeting and the nature of business to be transacted at the AGM especially the special business because ether ordinary businesses that can be transacted at an AGM is already stated in CAMA. When the meeting is to consider a special resolution, its terms should be set out in the notice of the meeting. 
AGMs must be held in Nigeria.
Agenda or ‘Business’ of an AGM
There are two types of businesses that are transacted at AGMs; ordinary and special business. The ordinary business include; declaration of dividend, presentation of financial statements, reports of the directors and auditors, election of new directors to replace retiring directors, etc. the others are special businesses (of which notice must be given).
Notice of AGM
Persons entitled to notice under Section 219 of CAMA are members, directors, auditors, and secretaries. Failure to give a member notice of a meeting can invalidate the results of the meeting. Where notice of a meeting has been given to a member, such member cannot have the meeting set aside because he did not attend.
Therefore notice of an AGM must be full and specific enough to enable a shareholder to decide whether he wants to attend or not.
Meeting notice must be served personally on the member, or by post to his registered address. By Section 220 (5) CAMA, registered address means any address supplied by the member to the company for the purpose of giving notice to him. Now his raises one very crucial issue in corporate law today; can notice of an AGM (or any other meeting) be sent to a person who is entitled to receive notice, via electronic means? Our response to this is based on two factors. Firstly, was there any agreement or such notice by the members (this could be in the Articles of the company)? Secondly, where is the locus of the receipt of this notice? Where the members agree to receive electronic service o notice of an AGM, then such service will suffice as proper. Secondly, with regard to locus, it is will obviously be more acceptable if the notice is sent to the email address of those entitled to attend the meeting, instead of the notice being pasted on a website (even if it is on the website of the company).
Must a person attend an AGM personally? A person need not attend an AGM personally. He can attend through another person referred to as a proxy. A proxy is entitled to do everything in the meeting which the member can do himself. To appoint a proxy, all the person (member) need do Is to execute an instrument of proxy, forty-eight hours before the date of the meeting and deposit at the head office (or designated address) of the said company.
What is the Quorum of an AGM?
The Articles of companies provide for what should be the quorum of the company’s AGM. But where no such provision is made, resort will be made to CAMA. Under CAMA, the quorum of an AGM is a follows: (a) a third of the total number of person entitled to attend or 25, whichever is less; (b) if the number of members is six or less, the quorum is two.
However, it is always better to have stipulations as to quorum in the Articles of the company as that represent better corporate governance practice.
An AGM can be adjourned where the business of the AGM is unfinished at the original meeting or there was no quorum at the original meeting.
No doubt, the AGM is an indispensable point in the management of a company. It will be suicidal for the alter ego of a company not to give it, its rightful place. For companies who want to maximize profit and minimize cost, the AGM is a time of accountability and reflection on the company’s performance on those front.
Remember some time ago, the CBN introduced a policy that AGMs should be held at particular times in a financial year.
Section 213 Companies and Allied Matters Act, LFN C20 2004 (“CAMA”).
This is because of the CBN policy that banks must present their financial statements at the middle of the year. Invariably, implying that they must hold their AGMs somewhere in the middle of every year.
Section 213 (1)(b) CAMA.
Section 213 (2) CAMA, Okeowo v. Migliore (1979) 11 SC 138.
Section 410 (2)(b) CAMA.
Section 218 (1) CAMA.
Ososanya v. Obadeyi Ltd & Ors. (1966) 2 A. L. R. Comm.
Tiessen v. Henderson (1989) 1 Ch. 861.
Section 230 CAMA. But a proxy is not allowed in a company without shares, i.e. a company limited by guarantee except the Article of the company expressly permit .