How not to Hold Annual General Meetings
Annual General Meetings are important. Firstly, they are compulsory. Secondly, vital subjects are discussed there: during AGMs, shareholders approve financial statements. Without the shareholders’ approval, your business can’t meet the filing requirements.
The good news is, you don't have to hold offline AGMs if you don't want to. The shareholders can sign all the docs remotely. In this article, we'll break down how to switch to this simpler AGM format.
By the way company secretaries in Singapore can sign everything remotely too. Check out East river secretarial services!
What they do at these meetings
During annual general meetings, the company informs its shareholders about the current financial situation: the officers present financial statements and the shareholders issue a resolution of approval.
At AGMs, shareholders also adopt resolutions on other matters: on dividend declaration, on re-election of directors and on directors’ fees.
You don’t have to hold AGMs
Only public companies must hold AGMs. Private limited companies can decide whether they want them or not.
If you don’t feel like organizing AGMs, your company members need to pass a resolution to dispense with them. Just ask your corporate secretary to compile the paper. All the shareholders must endorse the document for it to come into force.
Having dispensed with AGMs, you will still need to pass written resolutions on matters that you would otherwise discuss at AGMs. Financial statements are the principal subject. Written resolutions may circulate on paper or as e-mails.
The resolution putting an end to AGMs may cease to be in force – members can adopt a new resolution to revoke the dispensation. In this case, an AGM must be held if at least 3 months remain to its due date.
If you decide not to hold AGMs, your shareholders will still have to pass resolutions — but they will be able to do it remotely.
Financial year end, AGMs, and Annual Returns
Why the FYE is important here. The financial year end (FYE) is the end of the company’s accounting period. It recurs every 12 months. The FYE sets the deadlines for filings connected to AGMs. Even if you dispense with AGMs, you have to prepare the documents for these Annual Returns. Have no worries, it’s the company secretary’s job, not yours.
Financial Statements. Every company exempt from AGMs must send the financial statements to its shareholders within 5 months after the FYE. Then, depending on your company type, you either submit the FS to ACRA together with the Annual Return or not.
If you have less than 20 shareholders and none of them is a corporation, you are exempt from sending your financial statements to ACRA. In contrast, businesses partially owned by other businesses must submit financial statements. Insolvent companies are obliged to do it, too.
Annual Return is a set of documents that indicate your company’s financial health and status. The AR is to be filed only after the shareholders signed the resolution approving the financial statements. ACRA expects your AR lodged within 7 months after the FYE.
So, here’s the course of action for a Solvent Exempt Private Limited Company:
- Your company issues a resolution to dispense with AGMs.
- All the members adopt it and you forget about the meetings.
- After each FYE your corporate secretary e-mails a resolution on the financial statements to all the shareholders, they sign.
- Your secretary files the ARs with ACRA.
That’s it!
5 months
after the FYE to send out
the Financial Statements
7 months
after the FYE to file
the Annual Return
Rare cases when you must hold AGMs anyway
There are two situations when you have to call a full-fledged annual general meeting despite the dispensing resolution being in force:
- If a member requests an AGM within 14 days before the last day of the 6th month after the Financial Year End (FYE).
- If a member or an auditor requests an AGM within 14 days after the company sent out the financial statements.
In these two cases, a company is obliged to hold an offline AGM within 6 months after the FYE. The company may apply for an extension of time to hold an AGM. The maximum extension is 2 months.
Deadlines to uphold if you want AGMs
If you decide to hold AGMs, you must follow the deadlines. AGMs must be held no later than 6 months after FYE and ARs must be submitted within 7 months after the FYE.
6 months
after the FYE to hold
the Annual General Meeting
7 months
after the FYE to file
the Annual Return
How to call an AGM
Notice. A company must inform all the board members, shareholders, and officers of the company about the upcoming meeting. It’s the responsibility of the corporate secretary to draft and send the notices. These documents must contain date, place, and time of the meeting, subjects that the company has to discuss, special resolutions on the agenda, and voting thresholds required for approval. The document must also specify whether the recipients can appoint proxies.
How to send notices. The mode of delivery must be specified in the company’s constitution. You can choose emails as the preferred mode.
Summary
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AGMs let the shareholders participate in the life of their companies. Resolutions essential for companies’ accountability are passed during these meetings.
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Private limited companies can dismiss classic offline AGMs but they must still pass resolutions. It can be done via e-mail. Upon special requests from shareholders and auditors, a company must hold an AGM nonetheless.
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Even if a company dismissed AGMs, it has to lodge its Annual Returns. It can be done only after its shareholders signed a resolution on financial statements. ARs should then be submitted within 7 months after the FYE.
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If you decide to hold AGMs, you must follow the deadlines. AGMs must be held no later than 6 months after FYE and ARs must be submitted within a month after the meeting.
