This is the first in a small series that Kindrik Partners is working on, pulling together company admin to be thinking about when 1 April comes around each year.  In this piece, we’ll help you work out whether you have to hold an annual meeting of shareholders (also known as an annual general meeting or AGM).

Do I have to hold an AGM?

Yes, if you’re an NZ company, unless:

• your company is super new.  You don’t have to hold an AGM in the same calendar year that you’ve been incorporated.  You have an 18-month window after incorporation in which to hold your first AGM

or

• you can tick all of the following boxes:
• there is nothing required to be done at that meeting
• the board has specifically resolved that it’s in the company’s interests not to hold a meeting because there’s nothing required to be done at an AGM (i.e. the board has considered, and decided, that there’s nothing that the shareholders should be given an opportunity to discuss, comment on, or ask questions about), and
• the company’s constitution doesn’t require an AGM to be held.  If your constitution is based on our template, you should be able to tick this box but it’s worth double-checking.  The changes to the NZ Companies Act 1993 allowing the flexibility around AGMs described here were made in 2017, so many constitutions (including some based on older versions of our template) may still require you to hold an AGM every year.

How do I know if there is anything that needs to be done at an AGM?

If you’ve got financial reporting matters to handle:  We’ll cover default financial reporting matters in detail in a separate blog but briefly, if you have 10 or more shareholders then you’ll likely need to work through some default financial reporting requirements that apply to you under NZ law at the AGM.  For example:

• passing a resolution appointing an auditor for the financial year that just started, or
• signing off on the financial statements and annual report for the financial year that just finished (that tends to be part of the business of an AGM but doesn’t require a specific resolution).

You may also want to hold an AGM to seek shareholder support for opting out of some or all of those default financial reporting requirements for the financial year that just started. 

If your governance documents have bespoke requirements:  Your constitution and/or shareholders’ agreement (if you’ve got one) may include bespoke financial reporting requirements that apply in addition to the default requirements described above, and/or non-financial matters to be dealt with at an AGM (e.g. dealing with director rotations/retirements).  Give them a scan to double-check.

If you’ve got other business to handle:  Appointing new directors?  Switching out your constitution for one that doesn’t require an AGM to be held each year?  Got a major transaction on the horizon?  Shareholders can pass resolutions of that kind at any time, but if there’s something looming that requires a shareholder decision, consider whether it makes sense to take care of it at an AGM.

If I do have to hold an AGM, when do I have to hold it?

Find the magic date that fits each of the following criteria:

• not later than 6 months after the company’s balance date.  If your balance date is 31 March (like most NZ companies), this means holding your AGM before the end of September, and
• not later than 15 months after your last AGM (if you held one).

I technically have to hold an AGM but I’d prefer not to hold a meeting itself – what are my options?

You can do everything you otherwise would have done at a shareholders’ meeting via a written resolution.  This may not work for you if you have a large shareholder base (too unwieldy), or if your shareholders are likely to want to discuss the matters in detail (addressing questions all at once at a meeting might be preferable to death by a thousand emails).

If you go for a written resolution instead of holding a meeting:

• your written resolution will need to be signed within the same timeframe that would have applied to your meeting (i.e. before the magic date passes)
• you’ll need signatures from a supermajority of your shareholders, even if the resolution would only have required a simple majority if you’d held a meeting.  The size of that supermajority will depend on the content of the resolution.  For most resolutions, you’ll need (a) at least 75% of the shareholders by headcount, and (b) shareholders who together hold at least 75% of the relevant voting shares.  There are a couple of scenarios where that threshold might be higher:
• if your constitution or shareholders’ agreement specifically requires the threshold to be higher than that for the particular resolution (your governance documents can’t make that threshold lower, by the way), or
• where the resolution is asking shareholders to approve the company opting out of any default financial reporting requirements that will otherwise apply to that financial year under the Companies Act (more on this to come in a separate blog).  In which case, you’ll need shareholders who together hold at least 95% of the company’s voting shares to sign the resolution, and
• you’ll need to send a copy of the final dated resolution to those shareholders who didn’t sign it, if you pass the resolution with signatures from enough shareholders to meet your supermajority threshold but without getting signatures from all of your shareholders.  That must be done within 5 working days after the resolution is passed.  We suggest you talk to a friendly lawyer if you are passing a written resolution without getting signatures from all of your shareholders, because you may also need to send the non-signing shareholders a summary of the minority buyout rights that apply under the Companies Act in some situations (where a shareholders’ resolution approves certain constitution changes, a major transaction, or an amalgamation in certain circumstances).

It looks like I’m holding an AGM – where to from here?

If you do have to hold an AGM, there are some hoops to jump through to call the meeting (sending out the notice of meeting to your shareholders) and to hold the meeting itself.  Keep an eye out for some more content on those points shortly.  Everyone loves a cliff-hanger.