What is a general meeting and how does it work?

Here we tell you all about what a general meeting is, why they are organized and how you as a shareholder can participate in a general meeting. 

What is a general meeting?

A general meeting is a formal meeting and the highest decision-making body of a limited company. At the general meeting, shareholders can decide on important matters relating to the overall governance of the company, such as the approval of the annual accounts, dividends, the election of the board of directors and auditors, and amendments to the articles of association.

What types of general meetings are there?

There are two types of general meetings, which are: 

• Ordinary General Meeting (Annual General Meeting). held once a year, where mandatory items such as the annual report, dividend, discharge of the board of directors, and election of the board and auditor are discussed.
• Extraordinary General Meeting. which can be held at any time during the year to deal with specific issues that cannot wait until the next AGM. This may include decisions on major investments, fundraising, changes in the articles of association or change of management.

What can shareholders do at the general meeting?

Those who hold shares in the company receive: 

• Vote on important decisions. The amount of voting power each shareholder has depends on the shareholding and any share class. Normally, one share gives one vote, but in some companies there may be shares with different voting values.
• Asking questions and requesting information about the company's activities and finances. The Board of Directors is obliged to answer questions as far as possible without harming the company.
• Submit proposals for issues to be raised at the general meeting in advance. Shareholders with a certain percentage of shares (usually at least 10 %) have the right to have their proposals considered, for example to allow a venture capitalist to inject capital.

How can you participate in a general meeting?

Provided you own shares in the company, you can attend a general meeting by following the information in the notice, which sets out the date, time, place and agenda. For listed companies, the notice is sent out at least one month before the meeting, while private limited companies often send it out two weeks in advance. Shareholders usually also need to notify their intention to attend the meeting in order to attend and vote. 

How does a general meeting work?

Below we outline the steps involved in a general meeting from the time the notice is sent out to the end of the meeting. 

1. The invitation is sent out. The Board of Directors sends out a notice of the General Meeting with all the necessary information about the time, place and agenda. Shareholders normally need to register their participation in order to vote at the meeting.
2. Participant registration. Before the meeting starts, all participating shareholders are registered and their voting rights are confirmed according to the share register and, if applicable, on the basis of a fixed record date.
3. The General Meeting opens. Normally, the chairman of the board opens the meeting, after which a chairman is appointed to preside over the meeting.
4. Review of the agenda. The chairman of the meeting goes through the agenda and takes all items in the correct order. Shareholders can ask questions and make comments on each item.
5. Votes and decisions. Votes are taken for those items that require a decision. Some decisions require a simple majority, while the most important decisions require a qualified majority (a special voting majority) to be approved.
6. The meeting is closed. When all the items on the agenda have been dealt with, the general meeting is closed. Minutes documenting all decisions are drawn up and later signed by the chairman of the meeting and the registrar.

Do unlisted companies have general meetings?

Yes, unlisted companies are obliged to hold general meetings, just like listed companies on Nasdaq, for example. Unlisted companies may also call an extraordinary general meeting if necessary, in the same way as listed companies. The difference is that listed companies often have more formal requirements to follow regarding notice and information. 

Can dividends be decided at an extraordinary general meeting? 

Yes, it is possible to decide on a dividend at an extraordinary general meeting if there is room for a dividend according to the balance sheet and if the dividend is deemed justifiable under the Companies Act. The decision must comply with the statutory rules on dividends, in particular with regard to the assessment of defensibility and the scope for dividends. It is important to document the decision carefully and follow the requirements of the Companies Act.