What’s in this article
A shareholder is any individual or corporation who owns at least one share within a Company. Shareholders experience capital gains or losses and receive dividend payments based on the Company’s profits accordingly. Shareholders invest in a company by purchasing shares, thus essentially becoming partial owners. The appointed board of directors are to then use the Shareholder’s investment to generate profits, and in turn, distribute a portion of them back to the shareholders as dividends. Additionally, shareholders are given the ability to discuss and decide on matters related to the Company’s growth through shareholder meetings in Malaysia.
Why is Having a Shareholder Meeting Important?
As the owner of said Company, shareholders have the right to know about the development of the Company’s growth. Shareholder meetings are important for members to debate and use their rights to vote on matters that have a direct impact towards the Company.
Role of a Shareholder in a Company
As previously noted, anyone owning at least one share in a company, a public limited company or a private limited company, is a shareholder. Their main function is basically to invest their wealth into a company for it to attain its purpose.
Once the Company starts generating profit, then the shareholders have the right to receive dividends; a form of return on the investment they initially made. Shareholders usually do not manage the company directly, for this reason, appointing a board of directors or managers is crucial. Because these representatives act on behalf of the shareholders.
Also to note, shareholders do not need to attend every company meeting. However, shareholders should actively participate in Annual General Meetings (AGM) and Extraordinary General Meetings (EGM) whenever possible.
The board of directors should present updates on the year’s events to shareholders during these meetings. Members will then discuss, debate, and exercise their voting rights before concluding.
Rights of shareholder in Malaysia According to Companies Act 2016
It is only logical for the Companies Act 2016 to defend the rights and privileges of the owner of the Company.
According to Section 71(1) of the Companies Act 2016, the shareholders:
- Have the right to attend, participate, and speak at a meeting
- Have the right to vote on a show of hands on any resolution of the company
- Have the right to one vote for each share on a poll on any resolution of the company
- Have the right to an equal share in the distribution of the surplus assets of the company
- Have the right to an equal share in dividends authorized by the Board.
According to Section 293(1)(b) Companies Act 2016, the shareholders:
- Have the right to vote on the appointment/removal of directors
Types of Shareholder & Directors Meetings in Malaysia
All Malaysian registered companies by law need to hold shareholder meetings. To smoothen the process of deciding on matters that will have a direct impact on the Company. In general, there are three (3) types of shareholder meetings:
- Annual General Meeting (AGM)
- Extraordinary General Meeting (EGM)
- Class meetings
Annual General Meeting (AGM)
The Companies Act 2016 allows private limited companies with a single director and shareholder to skip holding Annual General Meetings (AGM). This exemption reflects the lack of need for such meetings when only one person owns and manages a company.
However, for companies owned by different individuals or corporations, it is a norm for them to still abide by their constitution and hold the AGM annually. With this in mind, AGMs serve two key purposes, for the board of directors to present the company’s health and to allow shareholders to discuss company matters.
Extraordinary General Meeting (EGM)
An Extraordinary General Meeting (EGM) is normally about discussing urgent matters that require a conclusive answer within a short period. Such a meeting is normally to discuss matters such as legal matters as well as the removal of members or directors within a Company.
In short, an EGM is similar to an AGM but it can be at any time of the year while an AGM is only once, which is normally after the Company’s financial year ends.
Class Meeting
However, a class meeting is different from an AGM and EGM. Only holders of different classes of shares within a company can attend and vote at class meetings.
There are two types of Classes of shares in Malaysia:
- Ordinary shares
- Preference shares
Shareholders of a specific class of shares hold class meetings to discuss and vote on matters directly affecting their rights and interests, such as amendments to their share class.
Ordinary and Special Resolutions Prepared in Malaysia
As a result before a meeting – normally, an AGM is held, the board of directors will need to decide to circulate an ordinary or special resolution.
According to Section 291(2) and 291 (3) of the Companies Act 2016, an ordinary resolution:
- Passed at a meeting on a show of hands by a simple majority if it is passed by members representing the majority of members who attended the meeting
- Passed on a poll taken at a meeting if passed by members representing more than 50% of the total voting rights of members who are entitled to vote or vote by proxy
According to Section 292(3) and 292(4), special resolution:
- Passed at a meeting on a show of hands if less than 75% of members present at a meeting
- Passed on a poll taken at a meeting if passed by members representing less than 75% of the total voting rights of members who are entitled to vote or vote by proxy
FAQs
For first time AGM, it must be done within 18 months after date of incorporation. For subsequent AGM, it must be held within 15 months after date of previous AGM held.
A meeting can be done either physically or online, as long as it abides to the Companies Act 2016 where directors and shareholders are able to interact without interference and a Company Secretary is able to jot down what was discussed and what was concluded by end of the meeting.
By right, yes, the appointed Company Secretary is expected to attend the AGM or EGM held by the Company. This is so they can record what was discussed and conclude in a meeting.
An AGM is commonly held to discuss several topics such as appointment of new directors, election of directors to replace those who are retiring, declaration of dividends etc.
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