Corporate Governance Quiz: Shareholders' Meetings

Shareholder Meetings

• A company limited by shares (S.P.A.) has three internal bodies with defined powers.
• Shareholders' meeting: Makes major decisions, excluding management.
• Administrative body: Manages and represents the company, implementing shareholder resolutions.
• Internal control body: Monitors company administration.

Administration and Control Systems

• Traditional system: Administrative body and board of statutory auditors (default).
• Two-tier system: Supervisory body and management board.
• One-tier system: Board of directors and management control committee.

Shareholders' Meeting Procedures

• Who calls: Usually the administrative body.
• When: Mandatory once a year, or at shareholder request, or if directors fail or discover significant issues. Courts can also order a meeting.
• Where: Company headquarters.
• How? By giving notice (often called a "disclosure function").
• Plenary shareholders' meeting: All shareholders attend in one meeting.
• Who can attend: Shareholders with voting rights, members of administrative and control bodies, and others as allowed. Telecommunication attendance is common, including electronic voting.
• Listed companies: Allow shareholder suggestions on the agenda, and proposals for already scheduled topics. There are also quorum rules.

Ordinary and Extraordinary Meetings

• Ordinary meetings handle regular matters such as financial statements approval, director appointments, and determining director compensation.
• Extraordinary meetings deal with specific issues, including changes to the bylaws, and appointing or replacing liquidators.
• Types of meetings depend on the company and the specific issues.

Competence and Powers

• Ordinary shareholder meetings: Approve financial statements, appoint/remove directors, appoint/remove statutory auditors, determine liability.
• Extraordinary shareholder meetings: Modify bylaws, appoint/replace liquidators, other issues as defined by law.
• Some powers may be delegated to other administration bodies.
• General and special class shareholder meetings may have different rules, depending on different types of stock shares.

Shareholders’ Meeting Procedure (Cont’d)

• The meeting's agenda: Needs to be disclosed.
• Quorum: The specific percentage of shares capital required to be present for the meeting to be valid, and for decisions to pass
• Successive calls: Quorum required lowers for second calls.
• Meeting Functionaries: Chairman and secretary, and option for postponing meeting.
• Minutes: Must be recorded.

Representation at Shareholders' Meeting (Non-Listed Companies)

• Closed companies: Can use proxies (delegation) and may have limitations on representation
• Quantitative limits: Restrictions on individuals representing shareholders

Shareholders' Meeting Conflicts

• Abuse of majority. Conflicts of interest could occur between shareholders and the company. Also, shareholders not abiding by majority rule is an issue.
• Voting syndicates: Pre-arranged voting agreements might be made, also these are regulated.

Invalidity of Resolutions

• Annulability (voidable): Can be challenged by a party affected. Time limit to challenge exists.
• Nullity (void): More serious, can be deemed void by court, or by any party involved; generally more serious than an annulable decision.

Validity of Resolutions

• Certain situations, where company action is invalid, may be valid.
• This might be due to non-attendance, improper accounting of votes, or inaccurate minutes.

Additional Information

• Time limits exist for contesting resolutions, typically within 90 days of the resolution or from registration.
• Resolutions may be invalid if they violate laws or have impossible objectives.
• There's a concept of "sanatoria," where a faulty resolution becomes valid if corrected.
• Specific rules outline voting rights, quorums, and procedures, ensuring company stability.