The general meeting of an AG: how it is held

The general meeting is the supreme body of the AG. It is where shareholders exercise their fundamental rights: approving the accounts, appointing the corporate bodies, distributing profit, amending the articles of association. It is not a formality to be dispatched in five minutes: it is an act that produces legal effects and that, if poorly prepared, can be challenged. Let us look at how it is convened and how it is held, without formal errors.

The non-transferable powers

Some decisions rest solely with the general meeting and cannot be delegated to the board of directors. Among the main ones:

• amendment of the articles of association;
• appointment and removal of the members of the board of directors and of the auditors;
• approval of the management report and the annual accounts;
• resolution on the use of the profit shown in the balance sheet, in particular on dividends;
• discharge of the members of the board of directors;
• decisions reserved by law or by the articles to the general meeting.

This core of powers defines the perimeter of the shareholders’ authority. Everything not reserved for the meeting remains, as a rule, with the board.

The convocation: who, how, when

The ordinary general meeting is held every year, within six months of the close of the financial year. Convocation is normally the responsibility of the board of directors, but it may also be requested by shareholders representing a qualified share of the capital or of the votes.

The convocation must be communicated in the form provided for by the articles of association, at least twenty days before the date of the meeting. It must indicate:

• the date, time and place (or the arrangements, if it is held by electronic means or abroad in accordance with the articles);
• the items on the agenda;
• the proposals of the board of directors and, where applicable, of the shareholders who have requested that an item be dealt with.

On items not announced in the agenda, resolutions cannot, in principle, be passed. Exceptions are the proposal to convene an extraordinary general meeting and that to initiate a special investigation.

The universal meeting

If all shareholders are present or represented, the meeting may be held without observing the convocation formalities: this is the so-called universal meeting. It is the typical instrument of companies with few shareholders, allowing rapid resolutions. However, no one must object to it being held, and the agreement on holding the meeting must be genuine.

Quorum and majorities

Unless the articles provide otherwise, decisions are taken by an absolute majority of the votes attached to the shares represented. Some particularly far-reaching resolutions, however, require a qualified majority: at least two thirds of the votes represented and the majority of the nominal value of the shares represented. Falling into this category are, among others:

• amending the company’s purpose;
• introducing shares with privileged voting rights;
• a capital increase with conditional capital or within a band;
• the restriction or removal of subscription rights;
• the dissolution of the company.

The articles of association may introduce higher quorums, but may not lower those provided by law for qualified decisions.

The conduct of the meeting

The chair opens the meeting, verifies the regularity of the convocation and establishes attendance by means of a list of participants (number of shares and votes represented). The meeting then moves on to the items on the agenda, with discussion and a vote on each. The decisions and appointments must be recorded in the minutes: the minutes are signed by the chair and the secretary and are an essential document, also for the commercial register when the resolution has to be entered.

Following the reform of the law on the AG, companies may provide in their articles for modern forms of conduct: a meeting by electronic means, remote voting or an entirely virtual meeting. These must, however, be regulated properly to ensure the identification of participants and the regularity of the vote.

Shareholders’ rights to safeguard

At the meeting shareholders exercise rights that the chair must respect: the right to vote, the right to obtain information from the board and the auditors, the right to make proposals and to request an investigation. Compressing these rights is one of the most frequent causes of resolutions being contested.

Challengeability of decisions

A resolution adopted in breach of the law or the articles of association may be challenged before the court by shareholders or by the board. Convocation defects, unannounced items, quorums not observed, inadequate information: these are all grounds that may cause a decision to fall. Formal care is not bureaucracy, it is the guarantee that decisions will hold.

How we work at SIH ONE

We prepare compliant convocations, agendas and proposals, assist with the conduct of the meeting and draft minutes that hold up before the commercial register and any challenge, adapting the procedures to the real size of the company.

Do you want your general meeting to be held without formal defects and with solid decisions? Discover the services of our corporate division and structure the governance of your AG.