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Shareholders Convening Extraordinary General Meeting: Can The Costs Be Recovered?
An extraordinary general meeting (“EGM”) is a meeting of shareholders other than the company’s annual general meeting. Under section 310 of the Companies Act 2016 (“the Act”), an EGM may be convened by either the board of directors or the shareholders. According to section 310(b) of the Act, for shareholders to convene an EGM, the shareholders must hold at least 10% of the issued share capital of a company or a lower percentage as specified in the constitution of the company or if the company has no share capital, by at least 5% in the number of the shareholders.
Further, shareholders of a company have power under section 311 of the Act to require the directors to convene an EGM (“section 311 requisition”). Following a section 311 requisition, the directors are under an obligation to call and hold an EGM in accordance with section 312 of the Act.
When directors fail to convene EGM following a section 311 requisition
There may be a situation where upon a section 311 requisition, the directors default in calling and holding a meeting of shareholders in accordance with section 312 of the Act. Section 312 states that:
- Directors shall call for the meeting within 14 days from the date of the requisition;
- Directors shall hold the meeting on a date not more than 28 days after the date of the notice to convene the meeting;
- Notice of meeting shall include the text of resolution if requests received by company identify a resolution intended to be moved at the meeting;
- Business that may be dealt with at the meeting includes a resolution of which notice is given in accordance with section 312 of the Act; and
- If the resolution is to be proposed as a special resolution, the directors shall be considered as not having duly called for the meeting if the notice of the resolution is not
- given in accordance with section 292 of the Act.