Free Law Dissertations - In Principle At Least, Then, Agms Are The Key Mechanism For Promoting
In principle at least, then, AGMs are the key mechanism for promoting transparency and accountability in the management of company affairs. But in practice there is wide agreement that they do not usually achieve these objectives very satisfactorily because of the realms of regulation and governance that surrounds them. In its review of company law the Company Law Review recognised that the rapid development of communication technology and its applications has great potential for improving the preparation and conduct of company general meetings and more generally for communication between companies and their shareholders. There are a multitude of reasons why a company may wish to call or hold a meeting and there exists equally a multitude of circumstances and ways in which such a meeting can be called. In large companies most decisions about company business will be taken by the board, nevertheless, the shareholders meeting are still equally as important and directorial accountability to the shareholders depends heavily upon the ability of the shareholders in general meetings to review the performance of the board.
Before considering whether or not the imposition and application of bureaucratic regulations and practices governing the conduct of meetings tends to prevent them achieving the end for which they are commonly held, it must first be considered why they are commonly held. It is a rare shareholders’ meeting which does not end up passing a resolution on some matter, although the business of general meetings does not exist entirely of the consideration of proposals for resolutions.
Shareholder meetings have, in recent years received bad press as it is argued that in small companies directors frequently meet together informally and in larger companies shareholders do not show sufficient interest in using the general meeting and often allow it to be captured by single issue pressure groups, whose primary objective is to advance the policies they stand for rather than the interests of the company. The Company Law Review carried out by the government recognised that the formalities surrounding meetings were often impractical and unnecessarily bureaucratic and concluded that the new Bill will remove the requirement for private companies to hold AGMs. It will also remove the requirements to lay the accounts and re-appoint the auditors annually at a general meeting (usually the AGM). Most private companies will therefore no longer be automatically obliged to hold AGMs which are, for most of them, an unnecessary formality that carries out no business of substance.
In small companies where shareholders and directors are the same people, requiring them to distinguish between the decisions they take as directors and those which they take as shareholders can seem unduly burdensome as the rules for the two meetings are not the same, for example as to the length of notice that is required.
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