Company Meetings, Notices, Voting and Resolutions

A company’s members cannot decide anything one by one. They decide together, at a meeting, by voting. The law is therefore strict about how a meeting is called, who must be told, how many must attend, how votes are counted and how large a majority a given decision needs.

A decision taken at a meeting that was not properly called, or by too small a majority, can be set aside. Examiners test these rules with precise figures, so every number matters.

This topic covers the three types of meeting, the rules on notice, quorum, virtual meetings, voting and polls, the two kinds of resolution and the matters that need each, the companies that need not hold a general meeting, and the statutory books.

Meetings of a company

Companies and Allied Matters Act (CAMA) provides for the general meeting of members and for meetings of the board of directors. General meetings are the annual general meeting, the extraordinary general meeting and the statutory meeting, which a public company holds once in its life. All statutory and general meetings must be held in Nigeria, but section 240(2) lets companies hold them virtually or electronically, as explained below.

Notice of meetings

Length of notice

Every meeting needs 21 days’ notice, counted from the date on which the company sends out the notice (section 241). The members may waive the requirement, which in practice means that they agree to a shorter period.

Who must receive notice (sections 243 and 244)

1. every member;
2. every person on whom the ownership of a share devolves because he is the legal personal representative, receiver or trustee in bankruptcy of a member;
3. every director of the company;
4. every auditor for the time being of the company;
5. the company secretary; and
6. the Corporate Affairs Commission, in the case of a public company.

The notice must state the place, date, time and purpose of the meeting.

Modes of giving notice (section 244(1), as amended in 2023)

A company may give notice to a member personally; electronically; by post to him or to his registered address; or by sending it to the address he gave the company, if he has no registered address in Nigeria. The Business Facilitation (Miscellaneous Provisions) Act 2023 added electronic notice to the older methods.

The effect of failing to give notice (section 245(1))

Failure to give notice invalidates the meeting, unless the failure is an accidental omission by the person giving the notice. A deliberate failure to tell some members, or an omission that is not accidental, makes the meeting and its decisions open to challenge. This is why companies keep a record of who was sent notice and when.

Quorum

The quorum is the minimum number of members who must be present for the meeting to transact business. The rule in the syllabus is one-third of the total number of members of the company or twenty-five members, whichever is less, present in person or by proxy. A proxy is a person appointed by a member to attend and vote for him.

The three types of general meeting

1. The statutory meeting (section 235)

• A public company must hold it once, within six months from the date of incorporation.
• At least 21 days before the meeting, the directors must send the members a statutory report. It covers matters from before incorporation, including the floatation, the capital raised, and the particulars of the directors and auditors.
• An auditor must certify the report so far as it relates to the shares allotted and the cash received for them (section 235(5)).
• The directors must promptly deliver the certified report to the Corporate Affairs Commission (CAC).
• Members may propose a resolution at the meeting after giving 21 days’ notice, counted after receiving the statutory report.
• Penalties. A company and its officers who fail to hold the meeting commit an offence and are liable to a fine, set by the CAC by regulation, for every day of default (section 236). The court may order the company to be wound up for failing to hold the meeting in time or to deliver the statutory report to the CAC (section 571(b)). The court may also extend the time, on penalty.

2. The annual general meeting (sections 237 and 238)

• It must be held once every year, in addition to any other meeting in that year.
• Not more than fifteen months may pass between one AGM and the next. Except for the first, the CAC may extend the time by three months.
• A company that holds its first AGM within 18 months of incorporation need not hold one in the year of incorporation or in the following year.
• All business at an AGM other than ordinary business is special business. Ordinary business is: declaring dividends; presenting the financial statements and the reports of the directors and auditors; electing directors; appointing the auditors and fixing their remuneration; appointing the audit committee; and disclosing managers’ remuneration.
• The company and every officer in default are liable to penalties fixed by the CAC (section 237(5)).

3. The extraordinary general meeting (section 239)

• The board may convene it whenever it thinks proper. Any director may convene it if there are not enough directors within Nigeria to form a quorum of the board.
• Members may requisition it if, at the date of the requisition, they hold not less than one-tenth of the paid-up capital. In a company with no share capital, the requisitionists must represent at least one-tenth of the voting rights of all members entitled to vote.
• If the directors fail to convene the meeting, the requisitionists may convene it themselves, within three months, and may recover their reasonable expenses from the company.
• The notice is 21 days.

Companies that need not hold general meetings

A single-member private company and a small company need not hold annual general meetings (section 237(1)).

Virtual meetings (section 240(2), as amended in 2023)

All companies, and not just private companies, may hold general meetings virtually or electronically, provided that they comply with their articles of association.

Voting at meetings

A resolution put to the vote is decided on a show of hands or by electronic voting, unless a poll is demanded before, or on the declaration of the result of, the show of hands. A poll can be demanded by:

1. the chairman, if he is a shareholder or a proxy;
2. at least three members present in person or by proxy;
3. a member or members present in person or by proxy who hold not less than one-tenth of the total voting rights of all members who have the right to vote at the meeting; or
4. any member or members who hold shares that give the right to vote at the meeting and that are paid up to not less than one-tenth of the total sum paid up on all the shares that confer that right.

If the votes are equal, on a show of hands or on a poll, the chairman is entitled to a second, or casting, vote (sections 248 and 250).

On a show of hands, each member has one vote, however many shares he holds. On a poll, votes follow the shares. That is why a poll protects large shareholders, who are outvoted on a show of hands by many small ones.

Ordinary and special resolutions

Ordinary resolution (section 258(1))

An ordinary resolution is passed by a simple majority of the votes cast by the members entitled to vote, in person or by proxy, at a general meeting. It is needed for: all ordinary business; an increase of the company’s capital; and the removal of directors.

Special resolution (section 258(2))

A special resolution is passed by not less than 75% of the votes cast by members entitled to vote, in person or by proxy, at a meeting of which 21 days’ notice of the intention to propose it as a special resolution was given.

Members holding at least 95% in nominal value of the shares, or at least 95% of the total voting rights, may agree that a resolution be proposed and passed as a special resolution on shorter notice. A special resolution is required for:

1. altering the business or objects clause;
2. changing the company’s name;
3. altering any provision of the memorandum;
4. reducing capital;
5. changing the liability of directors from limited to unlimited;
6. voluntary winding up;
7. re-registering a private company as a public company;
8. altering the articles; and
9. creating a capital reserve.

In most cases the CAC must be notified of the resolution. This is a task for the company secretary and the directors.

Statutory books and record keeping

The company must keep these books at its registered office:

• the register of members
• the register of directors
• the register of secretaries, which only public companies must keep
• the register of charges.

Meetings in more detail: working through the figures

Counting votes

A company has 2,000 shares in issue, each carrying one vote. At an EGM, members holding 1,300 shares vote, of whom 1,000 vote for a special resolution and 300 against. The votes cast are 1,300. Seventy-five per cent of 1,300 is 975. The 1,000 votes in favour exceed 975, so the special resolution passes, provided 21 days’ notice of the intention to propose it as a special resolution was given.

If the 300 who voted against had been 400, the votes cast would be 1,400, 75% is 1,050, and 1,000 votes would not be enough. An ordinary resolution on the same facts needs only more than half the votes cast, so 1,000 against 400 is enough. Notice that the test uses the votes cast, not all the shares in issue.

Calling a poll

A company has 1,000 voting shares. A member holding 120 shares demands a poll. Ten per cent of the voting rights is 100 shares, and 120 exceeds it, so the member is entitled to demand a poll. A member holding 80 shares cannot demand it alone, but three members, whatever their holdings, can.

Timing: first AGM and later AGMs

A company is incorporated on 10 March 2025. It need not hold an AGM in 2025 or 2026, provided it holds its first within 18 months of incorporation, that is by 10 September 2026. Suppose it holds the first on 30 June 2026. The next must be held not more than fifteen months later, that is by 30 September 2027, and the CAC may extend that by three months, to 31 December 2027.

For a public company, the statutory meeting must be held within six months of 10 March 2025, by 10 September 2025.

Requisition of an EGM

The paid-up capital of a company is ₦100 million. Members who together hold shares paid up to ₦15 million sign a requisition for an EGM to remove the managing director. They hold more than one-tenth (₦10 million), so the requisition is valid. If the directors do not convene a meeting, the requisitionists may do it themselves, within three months, and recover their reasonable expenses from the company.

Why the law protects meetings so strictly

The meeting is how the members exercise control over the board. If notice could be skipped, quorums ignored or majorities fudged, the directors could pass decisions without members knowing. Strict rules on notice, quorum, voting and majority give every member a fair chance to take part and give outsiders confidence that a resolution recorded in the books was validly passed.

Worked problems

Problem 1: a company that never held a meeting

1. The statutory meeting. A public company must hold the statutory meeting within six months of incorporation. Teletee has defaulted. The company and its officers are liable to a daily fine set by the CAC. The court may order the company to be wound up for failing to hold the meeting or deliver the statutory report.
2. The annual general meetings. It had to hold a first AGM within 18 months of incorporation, and then at intervals of not more than fifteen months. It has defaulted on every AGM, and the officers are liable to penalties. It would need to hold meetings unless it qualifies as a small company or a single-member private company, which a public company does not.
3. The sole director. A public company needs at least two members. Its officers must meet the requirements for a director and a secretary, and the secretary of a public company has qualifications that the law requires. A journalist may not be qualified, and one person cannot properly perform both roles where the law requires a separate secretary.
4. Advice. Call a general meeting at once on 21 days’ notice, deliver the overdue reports, regularise the position with the CAC, and appoint a qualified secretary and at least the required directors.

Problem 2: the AGM, dividends and the directors

Declaring dividends is ordinary business of the AGM, and the members declare it on the board’s recommendation. Dividends cannot be paid out of capital, and where there is an accumulated loss, profit must first be applied against it. The members in general meeting can decide not to pay a dividend and to retain the profit by ordinary resolution, and cannot force the directors to recommend one. The notice must have stated the business.

Questions that have been asked on this topic, and how to answer them

Common mistakes in the exam

• Quoting the wrong notice period. The syllabus gives 21 days for every kind of meeting, and also 21 days for the intention to propose a special resolution.
• Saying a special resolution needs 75% of all members. The test is 75% of the votes cast.
• Mixing up the periods: six months for the statutory meeting, 18 months for the first AGM and fifteen months between AGMs.
• Saying a private company must hold a statutory meeting. Only a public company must.
• Forgetting that a small company and a single-member private company need not hold an AGM.
• Forgetting that a quorum is one-third of members or 25, whichever is less.
• Saying the chairman always has a casting vote. He has one when the votes are equal.

Quick revision

• Notice: 21 days, waivable. Recipients: members, personal representatives, receivers or trustees in bankruptcy, directors, auditors, secretary, and the CAC for a public company. State place, date, time and purpose. Failure invalidates unless accidental omission.
• Quorum: one-third of members or 25, whichever is less.
• Statutory meeting: public company, once, within six months. AGM: yearly, not more than 15 months apart, first within 18 months. EGM: board or one-tenth requisition, 21 days.
• Poll: chairman, three members, one-tenth of voting rights, or one-tenth of paid-up voting shares. Casting vote on a tie.
• Ordinary resolution: simple majority. Special: 75% of votes cast, 21 days’ notice, nine matters.
• Statutory books: members, directors, secretaries (public companies), charges.

Practice questions

These are original questions written in the style of the Institute of Chartered Accountants of Nigeria (ICAN) exam. Try each one before you open the answer. Full model answers follow the written questions.

Section A style: multiple choice

Section B style: written questions

Model answers

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