Annual General Meeting

The ordinary business of an AGM is a defined list.

Laying the audited financial statements, the directors' report and the auditors' report before the members. Declaring a dividend where one is recommended. Electing directors to replace those retiring. Appointing auditors and fixing their remuneration. Appointing members of the audit committee where required.

Anything beyond that list is special business, and the notice must give proper particulars of it.

Notice must be given to every member entitled to attend, within the period CAMA prescribes, together with the accounts and reports. Short notice is possible only with the consent CAMA requires.

A quorum must be present for the meeting to be valid, and the articles set out how voting is conducted, whether by show of hands or by poll. A member entitled to attend and vote may appoint a proxy to attend and vote in their place, and the notice must say so.

Minutes must be kept, and the resolutions passed are what evidence the decisions later.

CAMA 2020 made two changes that matter to most Nigerian companies.

The first is the exemption. A small company, as defined in the Act, and a company having a single shareholder are not required to hold an annual general meeting. That removes a formality from the overwhelming majority of Nigerian private companies, which is sensible, because the meeting was largely notional where one or two people own and run the business.

The second is electronic meetings. A private company may hold its general meetings electronically, provided the meeting is conducted in accordance with its articles. That was significant during the pandemic and remains useful for companies with shareholders abroad.

What the exemption does not remove is the underlying obligations. Accounts must still be prepared, annual returns must still be filed at the CAC, and the register of members must still be kept current. Founders who read the AGM exemption as a general exemption from company formalities are the ones who fall into default.

For companies with outside investors, the AGM or its equivalent is worth keeping even where it is not required, because a documented annual meeting with accounts and minutes is exactly what a buyer or a new investor asks to see.

Three meetings, involving different people and deciding different things.

An annual general meeting is a meeting of shareholders, held once a year, dealing with accounts, dividends, directors and auditors.

A general meeting, sometimes called an extraordinary general meeting, is also a meeting of shareholders, but called when something needs deciding between AGMs: approving a major transaction, changing the articles, increasing share capital or removing a director.

A board meeting is a meeting of directors. It runs the company: approving contracts, appointing officers, allotting shares where the directors have authority, and recommending dividends.

Confusing them causes real problems. A decision requiring shareholder approval that was only taken at board level can be challenged, and a company that never distinguishes the two ends up with minutes that do not support any of its decisions.

For a small owner managed company, the AGM was always a formality, which is why CAMA 2020 removed the requirement.

Where it is held, attendance is often minimal in private companies, and the real decisions are taken elsewhere, which reduces the meeting to a paperwork exercise.

The exemption also creates a risk of drift. Companies that stop meeting stop producing minutes, stop laying accounts before members, and gradually lose the record that a buyer or investor will want.

And the AGM cannot fix a governance problem. Minority shareholders unhappy with how a company is run get one meeting a year at which they can be outvoted, which is why a shareholders agreement with reserved matters is worth more than an annual meeting.