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Board Meetings: What they are and why you should care
Company meetings are provided for under the Companies Act, No. 12 of 2002 (the "Act") in mainland Tanzania. The law governing regulation and control of companies in Tanzania mainland and Zanzibar is different. For the purpose hereof, this article is with respect to company meetings as stipulated under the Act in mainland Tanzania.
There are basically three (3) types of meetings commonly referred to under the Act. These as discussed below include; Annual General Meetings, Board Meetings and Extraordinary General Meetings.
ANNUAL GENERAL MEETING:
An Annual General Meeting (AGM), as the name signifies, is an annual meeting of the members/shareholders of a company. Every company, whether public or private, having a share capital or not, limited or unlimited must hold an AGM.
Section 133 of the Act provides that every company shall in each year hold a general meeting as its annual general meeting in addition to any other meetings in that year. The Act further provides that the first annual general meeting of a company shall be held within eighteen (18) months of its incorporation and a company shall after holding an AGM not exceed fifteen (15) months without holding another.
It is through an AGM that a company's members /shareholders get an opportunity to question the directors on amongst others, the company's business and financial position. However, mandatory business to be transacted during an AGM is stipulated by the Act as follows:
- Annual accounts of the company;
- Directors' report;
- Auditors report;
- Re-election of any directors retiring and seeking re-election of any directors retiring and seeking re-election in accordance with any requirement in the company's articles of association; and
- Election or confirmation of appointment of any directors in accordance with any requirement in the company's articles of association.
Nevertheless, the aforementioned business transacted at an AGM need not necessarily mean that the members/shareholders cannot include additional items for discussion.
It is imperative to note that the purpose of an AGM is not only for the members/shareholders to review the company's performance, operations and affairs over the past year but also provide necessary approvals for the functionality of the company for the subsequent year.
Furthermore, if default is made in holding an AGM on the basis of the Act, the Minister may on the application of any member of the company call or direct the calling of a general meeting of the company and give such ancillary or consequential directions as the Registrar thinks expedient including directions modifying or supplementing in relation to the calling, holding and conducting of the meeting, the operation of the company's articles, and the directions that may be given including a direction that one member of the company present in person or by proxy shall be deemed to constitute a meeting.
Generally, it is worth noting that the consequences of failure of a company to hold an AGM, as provided by the Act can render a company and every officer thereof liable for a fine and/or default fine.
BOARD MEETINGS:
Board meetings are held by the board of directors of a company. These are meetings that are regularly held either quarterly or monthly depending on the company's needs. During these meetings the directors of the company discuss and make decisions about the company's operations, strategy, finances, budget and any other matter arising from the management of the company.
EXTRAORDINARY GENERAL MEETINGS:
Extraordinary General Meetings (EGMs) are special meetings held by the members/shareholders outside of the regular schedule to discuss urgent issues that require immediate attention. EGMs are called on short notice and are usually held remotely or in-person hence business transacted at such meetings is referred to as special business.
Conclusively, AGMs, Board Meetings and EGMs are important components of effective corporate governance. It is a mandatory requirement of the law for companies to hold meetings and failure to do so could result in amongst others penalties and deregistration of a company.