The Emirates Securities and Commodities Authority (SCA) has organized in Abu Dhabi and Dubai a forum under the theme: "Public Joint Stock Companies (PJSCs) General Assembly Meeting - Rights and Obligations". Speakers include Ayman Haikal, A legal advisor at the SCA and Dr. Ashraf Abdul Mun'em of the SCA's Legal Affairs Department.
The two speakers highlighted the most significant legal aspects which must be noted during the holding and attending of general assembly meetings, particularly issues related to educating shareholders about their rights.
Highlighting the right way of holding a general assembly meeting, the speakers noted that a general assembly meeting must be held in the presence of the company's board of directors, the auditor, representative of SCA and shareholders, but the meeting shall be possible and valid only if a quorum is achieved, adding that, based on the purpose of holding the meeting, a general assembly meeting can be divided into three different types. These are: the Incorporation Meeting, Ordinary Meeting and Extraordinary Meeting.
An incorporation general assembly meeting is held soon after completion of the general subscription process of the PJSC's shares. The meeting discusses issues including report on incorporation of the company by the founders committee, election of the members of the first board of directors, appointment of auditors, ratifying of evaluation of the any shares in kind, if there is any of such stock, approving the appointment of Sharia supervision panel of the company to ensure things are done in accordance with Islamic principles and announcing the incorporation of the company.
The speakers pointed out that a general assembly meeting must be held once, at least, every year and within the first quarter following the end of a fiscal year to discuss issues related to the company's business, including its achievements and financial situation, which must be ratified by the general assembly. The assembly must also hear and ratify the auditor's report and elect new board members when the tenure of the incumbent board ends. The assembly must also discuss the company's budget, including its balance sheet, appoint auditors and determine their remunerations, which is the prerogative of the general assembly and so must not be left for the board of directors to decide. The assembly must also look into, and give approval or otherwise, board of directors' proposals regarding distribution of dividend and time of distribution and look into the allowances of the board members which must not exceed 10% of the net profit after all deductions and distribution of dividends (either in cash or in bonus share , which must not be less than 5% of the capital) to shareholders, the speakers explained.
Other responsibilities of the general assembly include deciding on absolving of board members from the responsibilities of their management or taking action against them as the situation may decide, the speakers explained.
Touching on extraordinary general assembly, they said it is held to discuss very urgent issues which would not be discussed under normal circumstances during ordinary general assembly. These issues include an urgent need for a change in the company's statute or the need for increase or decrease in the company's capital, liquidating the company or merging it with other company, selling or taking any other urgent action the company's project, extending the period of existence of the company or approving the issuance of bond or Islamic Sukuk.
Meanwhile, the quorum for holding an ordinary general assembly meeting is the presence of partners representing at least 50% of the capital.
If this quorum is not achieved at the first meeting, the partners must be called to a second meeting. Resolutions at this meeting are adopted with a majority of votes represented at the meeting unless otherwise stipulated in the company memorandum, they noted.
But a quorum of the extraordinary general assembly will not be achieved unless being attended by shareholders representing at least 75% of the company capital. If the quorum is not achieved, this assembly should be called to a second meeting. The quorum for the second assembly will be achieved if attended by shareholders representing 50% 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. The quorum of the third meeting shall be achieved irrespective of the number present.
The speakers noted that invitation to Shareholders to attend the general assembly meeting must be made through a notice to appear in two Arabic local daily newspapers, adding that it is normally done through the websites of securities markets in the country and the website of the SCA, in addition to registered letters addressed to each of them at least twenty one days before the date set for the assembly.
A shareholder or shareholders of 10% of the company's stakes has the right to include a topic or more on the agenda of the general assembly during the meeting, the speakers noted, adding that a resolution is passed in an ordinary general assembly by an absolute majority vote but a resolution at an extraordinary general assembly is valid only after a vote by 75% of shareholders if the issue is related to increasing or decreasing of the company's capital, the extension of its period of existence, its liquidation or merger with other company.