This is the first in a small series we’re 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).
Skip to a section:
- do I have to hold an AGM?
- how do I know if there is anything that needs to be done at an AGM?
- if I do have to hold an AGM, when do I have to hold it?
- I have to hold an AGM but I’d prefer not to hold a meeting itself – what are my options?
- it looks like I’m holding an AGM – where to from here?
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
- 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 obligations that apply to you under NZ law at the AGM. E.g. appointing an auditor for the new financial year, and signing off on the financial statements and annual report for the financial year that just finished. You may also want to hold an AGM to seek shareholder support for opting out of some or all of those default financial reporting obligations for the new financial year.
If your governance documents have bespoke requirements: Your constitution and/or shareholders’ agreement (if you’ve got one) may include special provisions relating to AGMs (dealing with director rotations/retirements, for example). 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. For most NZ companies your balance date will be 31 March, so this means holding your AGM sometime before the end of September, and
- not later than 15 months after your last AGM (if you held one).
I 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 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 resolutions (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 specifically requires the threshold to be higher than that for the particular resolution (your constitution 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 NZ Companies Act 1993 (more on this to come in a separate blog). In which case, you’ll need shareholders who together hold not less than 95% of the company’s voting shares to sign the resolution
- within 5 working days after the written resolution is passed, you’ll need to send to every shareholder who didn’t sign the resolution:
- a copy of the signed resolution; and
- if the resolution involved adopting, altering, or revoking a constitution, or approving a major transaction, a statement setting out the rights of shareholders under section 110 of the NZ Companies Act 1993. Broadly, major transactions involve assets or obligations which are greater in value than half of the company’s existing assets, and section 110 of the NZ Companies Act 1993 gives a dissenting shareholder the right to require the company to buy back its shares in specific circumstances. Talk to a friendly lawyer if you need help on this point.
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.