Types of Shareholder Meetings in Malaysia

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 they essentially becoming partial owners. The appointed board of directors are to then use the Shareholders investment to generates 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 direct impact towards the Company.

Role of a Shareholder in a Company

As previously noted, anyone owning at least one share in a company, 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 of 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. So as to smoothen the process to decide on matters that will have direct impact to the Company. In general, there are three (3) types of shareholder meetings:

1. Annual General Meeting (AGM)
2. Extraordinary General Meeting (EGM)
3. Class meetings

Annual General Meeting (AGM)

The Companies Act 2016 allows private limited companies with a single director and shareholder to basically 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. As a matter of fact, 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 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 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 total voting rights of members who are entitled to vote or vote by proxy