General Meetings of Companies
Since the establishment of companies, there has always been a need to adopt specific decisions for their management and governance. One of the principal corporate bodies that plays a decisive role in directing the Company’s affairs and achieving its objectives is the Company’s General Meeting.
Minutes and Legal Effects of General Meeting Resolutions
What Is a General Meeting of a Company and Why Is It Held?
A General Meeting is a gathering of the company’s shareholders and managers that is convened for the purpose of making decisions on significant corporate matters.
These meetings are generally held once a year or in accordance with the provisions of the company’s articles of association. General Meetings are held to review the balance sheet, profit and loss statements of the previous financial year, statements of assets and liabilities, company claims, reports of the board of directors and inspectors, and other matters related to the company’s financial accounts.
Types of General Meetings of Companies
In joint stock companies, the General Meeting is composed of the company’s shareholders and may be convened for various purposes, such as the incorporation of the company, the increase or reduction of capital, the election of members of the board of directors, and similar matters. Pursuant to the Commercial Code, three types of General Meetings are recognized: the Founding General Meeting, the Ordinary General Meeting, and the Extraordinary General Meeting.
Founding General Meeting
A Founding General Meeting must be held for public joint-stock companies. However, holding such meetings in private joint-stock companies also contributes to greater order and efficiency in the incorporation process.
In this type of meeting, all founders and subscribers are entitled to attend, and each share is entitled to one vote. The presence of subscribers who have committed to at least half of the company’s capital is required. If the required quorum is not met in the first session, two additional sessions may be convened. If the meeting is not formed after these sessions, the company shall not be incorporated.
Duties of the Founding General Meeting
- Verification of the subscription of all company shares and payment of the required amounts
- Review and approval of the founders’ report
- Appointment and approval of the initial inspectors and directors of the company
- Publication of notices and invitations to the meeting through an officially designated, widely circulated newspaper
The founders must make their report available to the subscribers at the location specified in the notice at least five days before the formation of the Founding General Meeting.
Extraordinary General Meeting and Its Formation
The Extraordinary General Meeting is convened with the presence of the company’s shareholders in urgent situations requiring specific decisions.
The presence of shareholders holding more than half of the company’s shares is required for the meeting and its resolutions to be legally valid. If the quorum is not achieved in the first session, another session shall be held in accordance with the same legal requirements.
Duties of the Extraordinary General Meeting
- Amendments to the company’s capital and articles of association.
- Decisions regarding early dissolution of the company.
- Decisions on matters expressly assigned to this meeting.
Ordinary General Meeting and Annual Corporate Decisions
All matters that do not fall within the authority of the Founding or Extraordinary General Meetings fall under the jurisdiction of the Ordinary General Meeting. The presence of shareholders holding more than half of the company’s shares is required for the first session. If the quorum is not met, a second session shall be convened, which shall be deemed valid regardless of the number of attendees. Adoption of resolutions requires approval by a majority of shareholders present. In the election of directors and inspectors, a relative majority of votes shall suffice.
The Ordinary General Meeting is held once each year in accordance with the company’s articles of association. The responsibility for convening this meeting rests with the board of directors. If the board fails to act, the company’s inspectors shall assume this responsibility.
Duties of the Ordinary General Meeting Under the Commercial Code
- Decision-making on all ongoing company matters except those reserved for the Founding or Extraordinary General Meetings.
- Review and examination of profit and loss accounts, the balance sheet of the previous financial year, and asset statements.
- Review of reports submitted by inspectors and directors and appointment of such persons.
- Approval of the balance sheet and issuance of directives for the distribution of profits among shareholders.
- Designation of a widely circulated newspaper for the publication of company notices and announcements.
Frequently Asked Questions Regarding General Meetings of Companies
A General Meeting is a formal gathering of shareholders and managers convened to make decisions on important corporate matters, including financial review, management reports, and other significant issues affecting the company.
Three types of General Meetings are recognized: the Founding General Meeting, the Ordinary General Meeting, and the Extraordinary General Meeting.
Its duties include verifying share subscriptions and capital payments, approving the founders’ report, appointing initial inspectors and directors, and publishing official notices.
It is convened in urgent circumstances to make specific decisions such as capital changes, amendments to the articles of association, or early dissolution of the company.
It is responsible for decisions on ongoing company matters, the review of financial statements, the examination of reports submitted by inspectors and directors, the approval of profit distributions, and the designation of an official newspaper for company announcements.
Yes. At the first session of any General Meeting, the presence of shareholders holding more than half of the shares is required. If the quorum is not met, a second session shall be held in accordance with applicable law.
The board of directors is responsible for convening the Ordinary General Meeting. In the absence of action by the board, this responsibility shall be assumed by the company’s inspectors. What is a General Meeting of a company, and why is it held?
What types of General Meetings exist?
What are the duties of the Founding General Meeting?
When is an Extraordinary General Meeting convened?
What are the duties of the Ordinary General Meeting?
Is the presence of shareholders holding more than half of the shares required?
Who is responsible for convening the Ordinary General Meeting?
