Guide to Singapore Company Meetings
Upon incorporation, a Singapore company acquires a legal identity that is distinct from that of its members. However, the company is an artificial entity and cannot act on its own; it must seek the input of its members for its salient decisions. Therefore, the company has to organize meetings of its shareholders and directors where such decisions can be made. A company meeting is a gathering of its shareholders or directors to transact any lawful business; this article describes the common types of company meetings.
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A Singapore company is required to hold a certain number of legally mandatory meetings. The Company Law in Singapore and the Constitution of the Company govern the conduct of these meetings. Companies differ in their size, business, directors, members, shareholders, etc. They may also differ in their constitutions. Therefore, the frequency and format of their meetings may also differ. While the law provides basic statutory requirements, the rules and regulations of the Constitution specify the process and format for holding these meetings.
The meetings of the company are broadly divided into two main categories: Shareholders’ Meetings and Directors’ Meetings. This article will discuss both these types of meetings and the important decisions taken during each. The article will further highlight the procedure for conducting these meetings.
The shareholders of a company are its actual owners since their shares represent a part of the ownership of the company. Their ownership entitles the shareholders to decide on certain business matters which require their approval. These meetings give the shareholders an opportunity to exercise control over the affairs of the company. They do so by approving business matters that the company proposes in the meeting. Shareholders’ meetings are of three kinds, described below. It is not mandatory for all companies to conduct these meetings. It depends on the business structure a company operates through.
The different kinds of shareholders’ meetings for Singapore companies are as follows:
Shareholders’ First Meeting
The shareholders’ first meeting (known as the “statutory meeting”) is a mandatory meeting of the shareholders of a public company. The company has to conduct this meeting within a specified period from the commencement of business. A company can conduct this meeting only once in its lifetime. The directors of the company will send a report (the “statutory report”) which consists of company details to all its members 7 days prior to the meeting date. The company also has to submit a copy of this report to the Registrar 7 days before the date of the meeting.
Companies which need to conduct this meeting
Only applicable to public limited companies having a share capital.
A company incorporated as a private limited company is not required to hold this meeting.
Purpose of the Meeting
The main purpose of calling this meeting is as follows:
- To discuss with the shareholders matters such as:
- The progress of the company from its incorporation date
- The company’s expectation towards its growth
- The contracts that the company has entered into
- The future plan and prospects of the company
- To discuss the Statutory Report which provides details such as:
- The share allotment structure
- Number of shares issued
- The total amount of receipts and payments
- Name of company directors, CEO, company secretary, auditors etc.
Shareholders’ Annual Meeting (AGM)
It is mandatory for a Singapore company to conduct a shareholders’ meeting every calendar year at specified intervals. This meeting – known as the “annual general meeting” (AGM) – gives the company’s shareholders the right to participate in certain decisions of the company which requires their approval. One of the primary purposes of the AGM is the consideration of the company’s financial statements.
Companies which need to conduct this meeting
For public companies, it is a legal requirement that they must conduct this meeting. But for private companies, this meeting is not mandatory. They can conduct the AGM, but the company law in Singapore provides private companies an option to dispense with the holding of the AGM.
Procedure to dispense with this meeting for a private company:
Purpose of the Meeting
The company conducts an AGM primarily to:
- Present the Financial statements
- Approve other business transactions of the company
The company has to present its complete financial statement to the shareholders in the AGM. The financial statements should give a “true and fair” view of the company’s financial performance during the year. On placing the statements, the shareholders have to adopt and approve the financial statements on the basis of simple majority.
The timeline prescribed by Company Law to present the financial statements at the AGM is as follows:
- Within a period of 4 months from the financial year end for a public listed company, and
- Within a period of 6 months from the financial year end for any other company.
Besides presenting its financial statements the company also approves other business transactions of the company. The following are a few of the business matters that require shareholders approval at the AGM:
- Dividend declaration
- Retirement and appointment of directors
- Appointment of auditors and
- Approval to issue shares
Timeline of the AGM
A company has to conduct the first AGM within a period of 18 months from the incorporation date.
Subsequently, the company has to hold the AGM every calendar year, but the period between two annual general meetings must not exceed 15 months.
Extraordinary Shareholder Meeting (EGM)
The extraordinary meeting of the shareholders of company in Singapore (apart from the statutory meeting and the AGM) is known as the Extraordinary General Meeting (EGM) . The company can convene this meeting at any time depending on the urgency of the matter that requires shareholder approval.
Companies which need to conduct this meeting
The directors and members of any company can convene an EGM.
Purpose of the meeting
The company will convene an EGM whenever an important business matter that requires shareholder approval (for example, alteration of the company’s constitution) arises in the company. The EGM discusses only special businesses (i.e. not an ordinary business that the company carries out in the AGM).
Convening the Meeting
The Company Law authorizes either the directors or two members (holding 10 percent or more of the share capital or who constitute not less than 5 percent of the number of members) to convene the EGM.
Procedure for Shareholders’ Meeting
A company has to follow all the guidelines for convening a shareholders’ meeting as below:
Notice of Meetings
The company sends the notice of meetings to all the members, shareholders and officers of the company. The key requirements of the contents and timeline for a notice of a general meeting are as follows:
- The notice must specifically contain the date, place and time of the meeting.
- It must specify the business items that the company has to discuss at the meeting
- In the case of a special resolution, the notice should state the requirement of a “special resolution” for the approval of a proposed business item.
- The notice should specify the rights of members to appoint a proxy.
- The notice should be sent :
- At least 14 days before the general meeting (in the case of business requiring the passing of an ordinary resolution)
- At least 21 days before the general meeting (in the case of business requiring the passing of a special resolution)
- At least 28 days before the general meeting (in the case of a special notice requirement)
A company can give a shorter notice for its meetings if the members who are entitled to attend and vote at the meeting agree to it.
The drafting and sending of the notices of the meetings are one of the main responsibilities of the Company Secretary.
According to the recent amendments to the Companies Act in Singapore, a company can now send notices of meetings electronically. This change in the provision will help reduce costs and improve efficiency. The Constitution of the company will specify the mode of electronic transmission (for example e-mail, fax, uploading notice on website of the company, etc.) of the notice which the company can set as the default mode of sending notices.
The quorum of a meeting is the number of minimum members that a meeting requires so as to be valid in accordance with the law. The company meetings in Singapore require a minimum of 2 members to be present personally unless the Constitution of the company states otherwise. The company cannot transact any business at the meeting unless it fulfils the quorum requirement.
A proxy is a person a member appoints to attend the shareholders’ meeting of the company and vote on behalf of that member. The notice of the meeting circulated to the members of the company should clearly state the right of members to appoint a proxy and that it is not necessary for the proxy to be a member of the company. The proxy form shall be an attachment to the notice of the company.
NoteA Member can appoint a maximum of 2 proxies to attend the same meeting.
The shareholders, in certain circumstances, may wish to propose a resolution at a meeting. In this case, the shareholders will have to give a special notice of the resolution to the company 28 days before the date of the meeting. The company will send this notice to the members at least 14 days before the meeting.
NoteThe purpose of sending a special notice is to invite special attention to a particular resolution that shareholders wish to propose in the upcoming meeting.
The special notice is required to pass resolutions for the following matters:
- Removal of Directors and
- Removal of Auditors from their office before their term of expiry.
Besides these procedures, it is important to understand the passing of resolutions in company meetings as explained below.
Shareholders of a company make decisions by the passing of “resolutions”. The passing of a resolution in a shareholders’ meeting signifies that the shareholders of the company agree to a proposition put forth by the company. The Companies Act provides for two types of resolutions, ordinary and special resolution. Unless the Act specifically states the requirement of a special resolution, the passing of the ordinary resolution will suffice. For instance the company law states that a company can alter its constitution by means of a special resolution.
The passing of these resolutions is determined by way of a percentage. The Company law fixes this percentage but the Company can increase the percentage requirement through its Constitution. The substantial decisions of the company require not less than 75% majority (special resolutions) while other decisions require a simple majority of not less than 50% (ordinary resolutions). These resolutions are explained below:
Ordinary or routine business matters require the passing of an ordinary resolution which is by means of a simple majority of at least 50%. Most of the company decisions require an ordinary resolution.
Following are a few examples of matters that require the passing of an ordinary resolution:
- Dividend declaration
- Appointment and remuneration of auditors
- Electing directors in place of retiring directors
Special business transactions of the company require the passing of a special resolution by means of a majority of at least 75% in favor of the resolution. This resolution is for major business decisions or changes to the company. Due to the significance of the change, more shareholders need to approve the resolution.
Following are a few examples of matters that require the passing of a special resolution:
- Alteration to clauses in the Constitution
- Reduction in the share capital of the company
- Change of company name
Resolution by Written Means
A written resolution is a resolution which the company does not pass at a shareholders’ meeting but by circulating the proposed resolution to shareholders for their approval. Private companies use this method of passing resolutions in writing.
A private company can pass an ordinary or special resolution by written means instead of holding a shareholders’ meeting. The company circulates the resolution to its shareholders for approval. The majority required for the approval on the passing of the resolution is on the same basis as an ordinary and special resolution.
The Constitution of a Singapore company outlines the proceedings of a Directors’ meeting. The company law in Singapore does not have any specific regulation for Board meetings. However, the company law authorizes the board of directors to meet and execute business decisions at meetings. The Constitution states the requirements such as quorum, notice, etc. and the company will have to comply with the rules and regulations as set out in the Constitution. Any director of a company can summon a meeting. The decision of matters discussed in the meeting are based on the majority of votes of the directors. In the case of equal votes, the chairman of the meeting will have a casting vote. A director cannot vote on any matter wherein he has any personal interest. Avoidance of any conflict of interest is a very important duty of a director.
Clauses in the Constitution
The Constitution of a Singapore Company has rules and regulations which govern the running of the company. It also consists of clauses with respect to the proceedings of the Directors’ Meetings such as:
- Quorum of the meeting
- Chairman to preside over the meeting
- Number of votes required for making a decision
- Adjournment of the meeting etc.
The Constitution a company adopts regulates the way the company operates, and includes the proceedings of the Directors’ Meetings.
A company secretary summons a meeting of the directors at the request of any one of the directors. It is a common practice to provide the notice at least 7 days prior to the meeting. However, the Constitution of the Company either states the requirement or is silent on this matter. The notice should clearly specify the date, time and place of the meeting.
Chairman of the Meeting
The appointment of a chairman for the directors’ meeting is essential so as to ensure that the meeting discusses all the agenda items and arrives at a decision with respect to it. The company can draft certain rules in its Constitution pertaining to the chairman of the meeting. However, in the absence of such rules, the directors of the meeting will appoint the chairman.
A board resolution is a decision taken by a company at the directors meeting. The company passes the resolution in the meeting only when the directors agree to a matter on the basis of a majority at the meeting.
The Directors pass a Board Resolution for matters such as the following:
- Opening of a bank account of a company
- Lending or borrowing money
- Power to invest company funds etc.
Default and its Consequences
A company will be in default if it does not comply with the relevant provisions of the Company Law in Singapore. For instance, a company will be in default if it does not conduct the AGM in a timely manner as the law prescribes. Breach of provisions such as these gives rise to an offense. Such an offense can result in the company and its officers being held guilty on conviction and it can also attract a fine and default penalties.
The company meetings are significant for the overall management and administration of its functions. It is essential for all companies to closely monitor the way they conduct their meetings. To ensure that your company complies with all the requirements and provisions pertaining to its meetings, it is a good practice to engage a corporate services firm that can assist your company in the conducting the meetings in a form that is in compliance with the Singapore Company law and your firm’s Constitution.