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Legal Procedure for Convening Valid Company Meetings in Nigeria in the Midst of the Covid-19 Pandemic
The physical distancing and stay at home order of the Federal Government of Nigeria arising from the Covid-19 pandemic has restricted movements in major cities in Nigeria.
Inter-state movements are also prohibited. This has affected the ability of companies to arrange for their meetings. The circumstance makes it difficult if not impossible for directors and shareholders to even access the venue of the meeting. It is therefore pertinent to ascertain the procedure to convene valid company meetings in the midst of the Covid-19 pandemic.
What is the duration of company meetings?
A company shall hold its first annual general meeting within 18 (eighteen) months after incorporation. Subsequent annual general meetings shall be held within 15 (fifteen) months after the previous general meeting.
A public company shall hold its statutory meeting 6 (six) months from its date of incorporation.
The directors of a company shall meet at any time to hold a Board of Directors Meeting (“the Board meeting”), the first of which shall be within 6 (six) months after incorporation of the company.
Who may call company meetings?
The directors shall call a statutory and general meeting, failing which a shareholder may requisition for the meeting.
Any director and the company secretary on the requisition of a director may summon a Board meeting at any time.
What is the duration of notice of company meetings?
There shall be a 21 (twenty-one) days’ notice to all those entitled to attend a statutory or general meeting.
There shall be a 14 (fourteen) days’ notice to all directors entitled to receive notice of a Board meeting.
Who is entitled to receive notice and attend company meetings?
The shareholders, a person who shares of the company devolves on; directors; auditors and company secretary are entitled to receive notice of a general and statutory meeting.
Every director shall be entitled to receive notice of the Board meeting unless disqualified from acting as a director of the company.
How can the notice be served on those entitled to attend company meetings?
Companies’ notices shall be served personally on the persons entitled to receive same or by sending it by post to their registered address. Once the notice is sent by post, service shall be deemed to be properly effected upon addressing and posting the letter containing the notice.
What will accompany the notice of company meetings?
The notice shall be accompanied by a Pack containing the agenda of the meeting, minutes of the previous meeting, management and committee reports, financial reports, proposals and other documents which are to be discussed at the meeting.
Where and how can company meetings be legally held in light of the physical distancing directive occasioned by the Covid-19 pandemic?
All statutory and general meetings are to be held in Nigeria. However, the provisions of the company law do not prescribe the mode upon which such meeting shall be conducted. The provision does not state whether it will be virtual or physical. If the Articles of Association of a company permits, a virtual general or board meeting may be validly held, with some members convening at the address in the notice with others calling in from other locations in and outside Nigeria. This meets the requirements of a general meeting in Nigeria because the relevant legal provisions have been met. It is upon this premise that the United Bank of Africa (UBA) and First City Monument Bank (FCMB) held virtual AGMs in the midst of the Federal Government lockdown order.
Since a Board meeting is not a statutory or general meeting that must be held in Nigeria, many companies have imbibed the practice of holding Board meetings in locations outside Nigeria and even by virtual means such as telephone or video conferencing. The best international practice is for at least one (1) director to be present at the physical venue stated in the notice while other directors may attend by telephone or video conferencing.
What business can be discussed at company meetings?
A company shall discuss the following ordinary business at its general meeting;
(a) declaring a dividend;
(b) presentation of a financial statements and reports of directors and auditors;
(c) election of directors in place of retiring or removed directors;
(d) the appointment and fixing of the remuneration of the auditors;
(e) appointment of members of the audit committee.
Apart from the businesses above, all other business shall be deemed special business. Notice must be given for an ordinary or special business before they can be conducted at the general meeting.
The shareholders at a statutory meeting shall discuss formation of the company, commencement of business or any other business arising from the statutory report.
The directors shall dispatch any company business they think fit at the Board meeting.
How can proxies be appointed to represent shareholders in company general meeting?
Any person who is entitled to attend and vote at a statutory or general meeting whether he is a member or not, may appoint a proxy to attend the meeting, vote and speak on his behalf. The instrument appointing the proxy shall be in writing and under the hand and seal of the appointer. The instrument appointing the proxy and the power of attorney shall be registered at the head office of the company or the place of the meeting not less than 48 (forty) hours before the time for holding the meeting.
Recently, the Companies’ registry issued Guidelines which mandated public companies to obtain approval from it before conducting an AGM using proxies. As the title of the Guidelines shows, CAC’s approval for AGM using proxies only applies to public companies and does not extend to private companies.
The Nigerian Stock Exchange also issued Guidance on Companies Virtual Board, Committee and Management Meetings for public quoted companies.
The directors may appoint proxies to represent them at a Board meeting if the Articles of Association so permits.
What would be the quorum at company meetings?
Thequorum for a general meeting shall be one-third of the total number of members or twenty-five (whichever is less) present in person or by proxy. But where the number is not a multiple of 3 (three), then the number nearest to one third. Where the members are 6 (six) members or less than 6 (six), the quorum shall be two (2) members.
The quorum necessary for the transaction of a Board meeting shall be 2 (two) where there are not more than 6 (six) directors, but where there are more than 6 (six) directors, the quorum shall be one-third of the number of directors and where the number of the directors is not a multiple of three then the quorum shall be one-third to the nearest number.
What will be the voting pattern at company meetings?
A resolution shall be decided at a general meeting by a show of hands or by poll. Resolutions are reached through voting by show of hands when majority of the shareholders present vote in support or against a business.
Vote by poll is usually votes by the number of shares in which shareholders holds in the company. A chairman, where he is a shareholder; three (3) shareholders present at the meeting; any member or shareholders holding one-tenth of the total voting rights in a company may demand for vote poll.
Any question at the Board meeting shall be decided by a majority of votes. Every director shall have a single vote. In case of an equality of votes, the chairman shall have a second or casting vote.