General meeting: when do you have to call it?

What is a general meeting

A general meeting is the highest body and meeting of members of a limited company, which includes a limited liability company and a public limited company. At the AGM, key issues concerning the management and future of the company are decided.

The members of the general meeting include all the members of the company, i.e. all the co-owners of the limited company and all the shareholders. The general meeting includes discussion and voting on important matters such as changes in management, approval of financial statements, distribution of profits, changes to the company’s articles of association, etc.

Convening the General Meeting

At a minimum, both types of companies must convene a general meeting once a year to approve the accounts for the previous financial year. The meeting must be held within six months of the last day of the previous financial year. The other conditions for the compulsory convening of a general meeting differ for limited liability companies and limited liability companies:

Obligation to convene a general meeting in the case of a limited liability company.

A limited liability company must also convene a general meeting if:

• Bankruptcy is imminent: a general meeting must be called if the company is threatened with bankruptcy or there are other serious reasons threatening its existence or operation. This situation requires an immediate decision on measures to rescue the company or its dissolution.
• A qualified shareholder requests the meeting: a qualified shareholder is a person who holds at least 10% of the voting rights or share capital of the company.
• Termination of the office of managing director: if the office of managing director responsible for the management and representation of the company is terminated (e.g. in the event of his resignation or removal).

Obligation to convene a general meeting of a.s.

A limited liability company must also convene a general meeting if:

• Large losses have occurred: Specifically, in a situation where the unpaid portion of the loss (after payment from the company’s available resources) has reached half of the share capital.
• A qualified shareholder requests a convocation: a qualified shareholder is a person who holds at least 3% of the share capital (if the company’s share capital is greater than CZK 100 million), 5% of the share capital (if the share capital is equal to or less than CZK 100 million), 1% of the share capital (if the share capital is equal to or greater than CZK 500 million)
• Election of a new member of the Board of Directors, Supervisory Board or Management Board: these are the key bodies responsible for the management and supervision of the company and the election must be made within two months of the original member ceasing to hold office.

Invitation to the General Meeting

The convening of the general meeting and the sending of invitations is the responsibility of the statutory bodies of the company, i.e. the managing directors in the case of an LLC and the board of directors or the board of directors of an Inc.

Invitation to the general meeting of an Ltd.

An invitation to the general meeting of the s.r.o. must be sent to all shareholders of the company at least 15 days in advance. The invitation must include the date, place and time of the meeting as well as the agenda and the text of the draft resolution.

Invitation to the general meeting of the a.s.

In the case of a public limited company, the invitation to the meeting must be published on the company’s website and sent to shareholders at least 30 days in advance. The invitation must include the following information:

• Company name and registered office.
• The place, date and time of the general meeting.
• An indication of whether an ordinary or alternate general meeting is being convened.
• The agenda of the general meeting: it should include a list of all items to be discussed and, where appropriate, nominations of persons proposed as new members of the company’s elected bodies.
• Record date for attending the general meeting: This is the date on which it will be considered which shareholders are entitled to attend the general meeting.
• Draft resolution of the general meeting and its justification.
• The deadline for receipt of shareholder comments on the agenda: if correspondence voting is allowed, a minimum period (at least 15 days) must be set for shareholders to respond to the agenda.

If an amendment to the articles of association is to be discussed, the invitation must contain a brief description and justification of the proposed amendments. The draft amendments in their entirety must then be available on the company’s website and for inspection at the company.

Proceedings of the General Meeting

A quorum must be present for the General Meeting to commence business. In the case of a limited liability company, this means that shareholders holding at least half of all votes must be present. In the case of a public limited company, shareholders holding together at least 30% of the company’s share capital must be present. Neither the partners nor the shareholders need to attend in person, but may send a proxy on their behalf.

In practice, a general meeting may proceed roughly as follows:

• Opening. Until the chairman is elected, the person who called the meeting presides over the meeting. This is followed by the collection of signatures on the attendance register.
• Presentation of the agenda: The chairman presents the agenda, which may include approval of the financial statements, a decision on the amount and method of distribution of profits, amendments to the articles of association, election of members of the statutory body, etc.
• Discussion of agenda items: each agenda item is duly presented for discussion and voting. Shareholders and shareholders of the company may submit relevant information and proposals.
• Discussion.
• Vote: The discussion is followed by a vote.
• Closure of the meeting: After all agenda items have been discussed, the Chairman announces the results of the vote and closes the General Meeting.
• Minutes of the General Meeting: The recorder, elected at the outset, has the task of drawing up the minutes of the meeting, which must then be sent to all shareholders within 15 days.

Voting rules at the General Meeting

The rules for voting at general meetings vary depending on whether the company is a limited company or a public limited company:

LLC Voting Rules.

Shareholders have different weightings of votes depending on how large their shareholding is. The default rule is that one vote is equivalent to one crown of the share capital. However, this rule can be modified in the articles of association.

In normal situations, a simple majority of the shareholders present is sufficient for acceptance. However, if the issue is a change in the content of the articles of association, the dissolution of the company or the admission of a contribution in kind or the possibility of setting off a monetary claim against the company against a claim for the fulfilment of the deposit obligation, then a 2/3 vote of all shareholders is required. The presence of a notary is also required in this case.

Voting rules a.s.

Even in the case of a public limited company, a simple majority of the shareholders present is sufficient to pass. In case of more important issues, then again it is necessary to obtain the votes of at least 2/3 of the shareholders present. These topics include the amendment of the articles of association, the increase of the share capital, the dissolution of the company and the set-off of a pecuniary claim against a claim for repayment of the issue price. In this case, a certificate by public deed is also required.

Summary

The general meeting is the supreme body of limited liability companies and joint stock companies where key issues are decided. It must be convened at least once a year within six months of the end of the financial year.

The invitation to the general meeting must include the date, time, place, agenda and draft resolution. In the case of an LLC, it is sent to the shareholders at least 15 days in advance; in the case of an A.S., it is published on the website and sent to the shareholders at least 30 days in advance.

The meeting starts with the election of the chairman and the recording secretary, followed by the agenda, discussion and voting. When the meeting is over, minutes are taken, which should be prepared by a professional to meet all legal requirements.