Holding of a general meeting in a private limited company
The general meeting is the supreme authority in a company. An ordinary general meeting must be held within six months after the end of each financial year. The Board issues notice to convene the Annual General Meeting, and the shareholders have a right to attend and cast their votes.
It is the board that issues summons to general meetings through written communication to all shareholders.
A summons must:
- State the time and place of the meeting.
- Be sent out no later than one week before the meeting is scheduled to be held, unless the articles of association specify a longer deadline.
- State the matters to be considered at the general meeting.
- Contain information concerning proposals for amendments to the articles of association if such amendments are listed as an item on the agenda.
The board prepares a proposed agenda in accordance with the applicable provisions laid down in the law and the articles of association. Any attachments to the summons must also be made available to the shareholders no later than one week prior to the general meeting, so that they have sufficient time to familiarise themselves with the matters before they are considered.
What matters should be considered by the general meeting?
The ordinary general meeting must always approve the annual financial statements, and decide whether dividends should be paid to the shareholders. It is the board that recommends how much should be distributed in dividends, and the general meeting which approves the payment.
Changes to share capital, mergers, demergers, amendments to the articles of association and the election of board members are other examples of matters which should be considered at a general meeting.
Approved annual financial statements must be submitted to the Brønnøysund Register Centre by 31 July each year.
Shareholders have the right to have matters considered at the general meeting. Such matters must be notified to the board before the summons to the general meeting is sent out to the shareholders, together with a proposal for a resolution or an explanation as to why the matter should be included in the agenda. If a shareholder wishes to bring up a matter which is not included in the agenda, this will require the consent of all shareholders, including those who have not attended the general meeting.
General meetings are normally held through the shareholders physically attending the meeting. If a shareholder wishes to participate through an electronic aid, the board may not deny the shareholder the opportunity to do this without an objective reason.
The chairman of the board or a person designated by the board is responsible for opening the general meeting. The general meeting may elect a meeting chairman, but the articles of association may specify who is to act as the meeting chairman.
Before the first vote, the person who opens the meeting shall prepare a list of the shareholders who are present, either in person or through a representative. The list must state the number of shares and votes that each of them represents.
This list must be used unless and until it is amended by the general meeting. There is no minimum requirement concerning the number of shareholders who must be present in order for a general meeting to constitute a quorum.
The general rule in connection with voting is that each share gives entitlement to one vote. This means that the shareholders cast votes according to the number of shares they own. General meetings generally reach decisions through a simple majority, i.e. more than half of the votes cast. In the event of a tied vote, e.g. 50-50, the meeting chairman will have the casting vote.
Different decisions have different requirements as regards the majority that is required. See Chapter 5 of the Companies Act. For example, amendments to the article of association require a qualified majority, i.e. a majority of more than two thirds of the votes cast.
Minutes of the general meeting must be prepared and signed by at least two people, one of which must be the person assigned to chair the meeting. If the company has a sole shareholder, two signatures are not required.
Extraordinary general meetings
Extraordinary general meetings are convened and conducted in the same way as ordinary general meetings. The board may decide that an extraordinary general meeting should be held. In addition, the company's auditor and shareholder(s) (+who represent at least ten percent of the share capital) may require a meeting to be held. Auditors and shareholders must submit a request to the board. It then becomes the board's responsibility to ensure that the meeting is held.
Simplified general meeting
In order to hold a simplified general meeting, all shareholders must consent to the meeting and be able to participate in the consideration of the matter(s) in an appropriate manner. A simplified general meeting may be held without a physical meeting, e.g. through the use of electronic aids.