As the time of holding general assembly meetings of public joint stock companies (PJSCs) gets closer, the Emirates Securities and Commodities Authority (SCA) has decided to issue this circular as a reminder to all concerned parties about the rules and regulations outlined by Federal law No. 8 of 1984 and its amendments concerning commercial companies, particularly the following regulations:
1. All companies must remain fully committed to Article (119) of the Commercial Companies Law concerning the holding of annual ordinary general assembly within the next four months following the end of the fiscal year.
2. All companies must remain fully committed to Article (124) of the Commercial Companies Law by including on the agenda of the ordinary general assembly the following issues. Arrangement of the subjects of the agenda must be strictly adhered to without infringement:
· Hearing of the board of directors' report on the activities of the company (about the company's achievements, financial situation during the year, auditor's report and ratifying of the report)
· Discussing the company's budget, profit and loss account and ratifying them
· Electing members of the board of directors at the end of every tenure, appointing auditors and deciding their remunerations during the annual ordinary general assembly meeting. The board of directors must not be mandated to appoint auditors or to decide their remunerations.
· Consider the proposals of the board of directors concerning the distribution of dividends and time of distributing the dividends.
· Absolve the directors and auditor of liability or decide to initiate proceedings of liability against them, as the case may be.
· Looking into the issue of deciding the allowances of members of the board in accordance with Article (118) of the Commercial Companies Law
3. Ensuring that the general assembly meeting is held on a working day of the week to enable maximum participation in the meeting by stakeholders
4. Invitation to the general assembly meeting must not be published in the newspapers until after approval is given by the SCA (the SCA must receive a copy of the following: board of directors' report on the activities of the company, its achievements and feasibility, general budget and balance sheet, proposals of the board of directors regarding the distribution of profit and a draft of the invitation notice), enabling the stakeholder to have access to all documents within an adequate period of time before the convening of the meeting and deciding the date of the meeting in collaboration with the SCA. Meanwhile, the draft of the notice of invitation to the general assembly meeting, which is to be presented to the SCA, must contain the proposed dividend distribution rate in details.
5. Shareholders shall be called to attend the general assembly meeting through a notice to appear in two Arabic local daily newspapers, in addition to registered letters addressed to each of them at least twenty one days before the date set for the assembly. The call notice must include the agenda of the meeting. A copy of the papers should be sent to the concerned authorities. In addition to the above, the company may also send the invitation in English
6. Resolutions of the ordinary general assembly shall not be valid unless adopted with the approval of a number of shareholders representing at least one half of the capital, unless the company memorandum provides for a larger majority.
If this quorum is not achieved at the first meeting, the shareholders must be called to a second meeting to be convened within a minimum period of seven days and a maximum of twenty-one days of the first meeting. Resolutions at this meeting are adopted with a majority of votes represented at the meeting unless otherwise stipulated in the company memorandum. Meanwhile, the managers may not participate in voting for resolutions relating to absolving them from the responsibilities of management.
7. The quorum of the extraordinary general assembly may not be achieved unless being attended by shareholders representing at least three quarters of the company capital. If the quorum is not achieved, this assembly should be called to a second meeting to be held within the subsequent thirty days following the first assembly. The quorum for the second assembly will be achieved if attended by shareholders representing half the company capital. If the quorum is not achieved in the second meeting, the call to a third assembly should be issued calling for the meeting to be held within the subsequent thirty days from the date of the second assembly. The quorum of the third meeting shall be achieved irrespective of the number present. Resolutions adopted in the third meeting shall not be valid unless approved by the competent authority.
8. Resolutions of the extraordinary general assembly shall be adopted by the majority of shares represented at the assembly, unless such resolutions concern the increase or reduction of the capital, the extension of the duration of the company, its dissolution before the date specified in the Articles, the amalgamation of the company with another company or its conversion. In such cases, resolutions will not be valid unless adopted by a majority of three quarters of the shares represented in the assembly. The chairman of the board of directors must implement the resolutions of the extraordinary general assembly and notify a copy thereof to both the Ministry and the competent authority within fifteen days from the date of their adoption.
9. The assembly will also appoint a rapporteur for the meeting to note down the vote count. It will also task the rapporteur and the auditor of the company to present evidence of achieving a quorum after it has been ratified by the SCA representative before the beginning of the meeting. This is to ensure the genuineness of the quorum and the validity of the assembly. The legal advisor and financial manager of the company must be present.
10. If the assembly is chaired by a person other than the board chairman his identity must be disclosed to the shareholders during the announcement of the validity of the assembly following the achievement of a quorum for the holding of the assembly meeting.
11. Whoever is entitled to attend the general assembly may appoint a representative, other than a member of the board of directors, in accordance with a special authorization confirmed in writing. In this capacity, the representative must not hold more than 5% of the company capital. An incompetent person or a person having lost his legal capacity should be represented by his legal guardian.
12. To protect the organizational aspect of the general assembly meeting, any shareholder who attends the meeting after it has been officially opened shall not have his shares counted in the quorum and during vote on the meeting's resolutions.
13. With the exception of matters reserved by the Law or the company article to the extraordinary general assembly, the general assembly shall have the competence to review all matters relating to the company.
The general assembly shall not have the right to discuss any matters other than those listed in the agenda. However, the assembly shall have the right to discuss serious matters that are revealed during the meeting.
If a participating public entity or a number of shareholders representing at least ten percent of the company capital request that particular issues be entered on the agenda, the board of directors should grant the request, otherwise the assembly shall have the right to discuss these matters. This is in reference of Article 129 of the Commercial Law
14. Every shareholder shall have the right to discuss matters entered in the agenda of the general assembly and to direct questions to the members of the board of directors. The members of the board shall have to respond to such questions up to the extent that may not jeopardize the company interests. A shareholder, dissatisfied by the response to his question may appeal to the general assembly. The resolution of the general assembly in this regard shall be enforceable.
15. Voting may be cast by secret ballot if it involves the election of the members of the board of directors, their dismissal or impeachment. This is in accordance with Article (125) of the Commercial law which states that "Every shareholder shall have the right to attend the general assembly and have a number of votes equal to the number of stocks he holds".
16. The minutes of the general assembly shall have to be recorded to include the names of present shareholders/their representatives, the number of shares held by them or those they represent, the number of votes allocated therefore, the resolutions adopted the number of votes for or against the resolutions and adequate summary on the discussions that occurred in the meeting. The minutes shall have to be signed by the chairman, the rapporteur, the vote counter and the auditor of the general assembly. The SCA and other concerned authorities must be furnished with a copy of the resolutions issued at the meeting within 15 days from the date of issuance.
17. The SCA and other concerned authorities must be furnished with a detailed list, certified by the chairman of the board of directors, of his name and the names of the members of the board, their capacities and nationalities.
The company must immediately notify the SCA and other concerned authorities of any changes occurring to the list.
18. The company's auditor chosen by the company's general assembly must be registered as a practicing auditor by the Ministry of Economy in accordance with Article (27) of Federal law no. (22) of 1995 concerning auditing profession.
19. In case approval is given for amendment of the company's statute or incorporation agreement by virtue of an extraordinary general assembly resolution, an application for the effecting of that amendment must be presented to the SCA. The text of the articles to be amended must be attached to the application and presented to the SCA within 15 days from the date of holding that extraordinary general assembly meeting and the fees due must also be paid.
20. Any public joint stock company which intends to increase its capital must take note of the following:
· It must ensure that the original capital is fully paid before approving the increase.
· If the increase is by grant shares then that may be tabled before an ordinary general assembly.
· The increase is though subscription then the following must be done:
a) The SCA must be furnished with the decision of the board of directors on the proposed projects and its feasibility studies and business plan explaining the basis of the capital increase. The permission of the SCA must be sought for before presenting the issue to the company's ordinary general assembly meeting. The same applies to the draft of the subscription notice.
b) The board chairman must publish statement in two local Arabic daily newspapers notifying shareholders of their advantage in the new subscription after approval for the floating of new shares is given by the extraordinary general assembly.
On this occasion, the SCA wants to reiterate the need for all to abide by the requirements of Ministerial Decree No. 518 of 2009, concerning corporate governance rules and institutional discipline standards, the rules of disclosure and transparency regarding provision of financial information and data of companies listed on the stock markets, as well those related to the core issues and important decisions that may have direct or indirect impact on prices and trends of stocks, in accordance with the SCA regulations. The SCA is also urging all to adhere strictly to Article (36) of the SCA Board Decree No. (3) of 2000 and its amendments, concerning the regulation for disclosure and transparency, particularly rules related to Article (11) concerning disclosure on time and date of convening a company's board meeting to deliberate on key issues which may impact on the prices and movement of stocks, like discussing and approving of financial statement and the board's dividend distribution proposals.
For more information, the company may refer to: Procedures and models for holding a general assembly meeting