Statutory meeting is a mandatory appointment, specified in the statute of the institution or company. Shareholders of a public limited company take part in them. These meetings must be organized not earlier than after a month and at the same time not later than six months after the start of business. Statutory meeting is one of the types of general meetings, next to the ordinary general meetings and extraordinary general meetings.
Functions of the statutory meeting
The statutory meeting performs the following functions:
- Checking and approving reports as well as determining if all required charges are made and shares are subscribed,
- Approval of the draft statute and its possible amendments,
- Selecting first directors and inspectors in the company,
- Discussing the type of newspaper in which all statements of the company will be published until the first general meeting is gathered.
Below are some basic rules:
- At the statutory meeting, there must be present subscribers who own 50 per cent or more of the company's equity capital. If this number is not reached during the first meeting, then two more meetings should be organized. In order for them to occur, there must be a break of at least twenty days from informing about the course and transaction carried out during the last meeting and from publishing this statement in a specific newspaper, to calling a new meeting. The number of participants present at a new meeting is determined based on the presence of at least one-third of the subscribers of the company's share capital. In order for the resolutions adopted to become valid and binding, during voting they must receive positive votes from the holders of two-thirds of the shares. If the number of members of the assembly is not determined during the last, third meeting, it is impossible to establish a company. It is worth adding that all candidates and promoters have the right to participate in the statutory meeting, while each shareholder may cast one vote.
- Before calling a statutory meeting, the organizers should obtain the opinion of an expert of the Ministry of Justice in writing, if the contribution of one or several promoters is in kind. This is to assess these contributions and attach them to the report prepared for the meeting. If the organizers demanded privileges, they are obliged to give reasons why they would receive them. In addition, they must attach specifically statements to their reports.
- At the statutory meetings, will be presented reports assessing non-cash contributions. Besides, they will settle the matter of privileges for promoters. Those whose contributions are factual and those who want to get privileges will not be able to vote if their applications are already considered and the share capital brought into the company will not be as it was required.
- The valuation of the appraiser of the Ministry of Justice is very important, therefore the statutory meeting may approve the valuation of in-kind contributions at a level not higher than proposed by him.
- Convening a statutory meeting:
- In the period not later than fourteen days before the date of the meeting, sending an invitation to subscribers who are already in possession of the shares, and presenting meeting program, the content of issues that will be resolved during the meeting, and which documents will be properly certified by two promoters, an idea for company status.
- Creating a list of guests together with their personal data and address, nationality and size of owned shares, which will be accepted by the promoters, but checked on the day and place of the statutory meeting.
- When invitations to the meeting and documents are sent to subscribers, the organizers are obliged to send them not less than seven days before the date of the meeting to the Registrar.
Examples of Statutory meeting
- Statutory meetings are held to vote on important company matters such as the appointment of directors, the adoption of new auditing procedures, the approval of large contracts, and the approval of dividends.
- Companies typically hold a statutory meeting at the end of their financial year, to review their financial performance, approve the financial statements and appoint auditors for the following year.
- New companies may hold a statutory meeting to discuss the company's objectives, the area of business it will operate in, the capital structure, and the appointment of directors.
- Some companies hold a statutory meeting when they are planning to go public, to approve the offer document and the prospectus.
- Statutory meetings are also held to discuss matters related to the company's compliance with legal and regulatory requirements, including changes to the company's articles of association.
Advantages of Statutory meeting
Statutory meetings have several advantages.
- Firstly, it helps to ensure that all shareholders are informed of the important decisions taken by the company. All shareholders are given the opportunity to discuss and vote on the issues presented at the meeting.
- Secondly, statutory meetings help to promote transparency and accountability. Shareholders can ask questions and express their opinions on the decisions taken at the meeting. This allows the shareholders to be aware of the company's decisions and the company's overall performance.
- Thirdly, statutory meetings help to ensure that all shareholders have a say in the company's decisions. This helps to ensure that the company's decisions are made in the best interests of the company and its shareholders.
- Finally, statutory meetings also help to promote good corporate governance. By allowing shareholders to voice their opinions and questions, it helps to ensure that the company is run in an efficient and responsible manner.
Limitations of Statutory meeting
Statutory meetings are a mandatory appointment, specified in the statute of the institution or company. While it is a legal requirement, there are some limitations to the statutory meeting that must be taken into consideration:
- Firstly, the company must provide notice of the meeting at least 14 days before it is due to be held.
- Secondly, the meeting must be held within a specific period of time, no earlier than one month and no later than six months after the start of the business.
- Thirdly, the quorum of a statutory meeting must consist of at least two shareholders or two directors.
- Lastly, the meeting must be held in the same place as the registered office of the company.
Introducing other approaches related to Statutory meeting, one should mention:
- The main purpose of the statutory meeting is to approve the company's annual programme of activities, including the report of the board of directors and the financial statements.
- Statutory meetings are also used to discuss and adopt changes to the company's statutes, such as a change of the company's name or the addition of a new article.
- Statutory meetings are also used to appoint the company's directors, vote on proposed mergers or acquisitions, and discuss other important matters.
- The statutory meeting also serves as a forum for the shareholders to express their views on the current activities of the company.
In summary, the Statutory meeting is a mandatory appointment specified in the statute of the institution or company. It serves as a forum for shareholders to discuss and adopt changes to the company's statutes, appoint the company's directors, vote on proposed mergers or acquisitions, and discuss other important matters.
- Ibp Inc. (2015), "Iran Company Laws and Regulations Handbook", Lulu.com, USA, Vol. 1
- IBP (2012), "Thailand Company Laws and Regulations Handbook", Int'l Business Publications, USA
- Pattajoshi B.(2018), "Entrepreneurship in the Hospitality, Tourism and Leisure Industries: Maverick Minds", Educreation Publishing, India
Author: Angelika Guzik