With the annual general meetings’ season approaching, the companies are forwarding their applications for approval of ordinary annual general meetings by the Capital Market Authority. As most ordinary annual general meeting convenes in March every year.
On the importance of general meetings of the companies and investment funds, Mohammed Saif Al Rashdi, Director of Legal Affairs and Enforcement Department at CMA said the legislator conferred on the general meetings a regulatory role including protecting the rights of small shareholders and ensuring integrity, prohibiting conflicts of interests between related parties as the general meeting is the supreme authority of any company that takes all resolutions in material matters over the powers of the board of directors and their resolutions are final and mandatory.
He added the general meeting of the company has wide powers in that the shareholder can vote and contests its decisions in addition to measuring the competency of directors and their ability to contribute in directing the management of the company as well as electing the directors to lead the company in the interest of the shareholders.
The legislator allowed the shareholders who hold at least 5% of the shares to suspend the resolutions of the general meeting resolved in favour of specific group of shareholders or detrimental to them or for the benefit of directors or others by objecting to the board of directors of CMA.
Al Rashdi said that CMA commenced approval process of the general meetings of public joint stock companies this season adding that CMA is keen to provide protection of the shareholders to exercise their rights by organizing the timetable of general meetings to ensure attendance of the shareholder all the meetings of the companies he/she invests in. CMA will dispatch an observer to attend the general meetings to ensure consistency of the resolutions with the law. CMA is also monitoring the companies’ disclosure through the MSM system the key resolutions taken by the general meeting in the day following the day of the meeting adequate time prior of trading session.
Al Rashdi said the legislator has set our an integrated legal framework ensuring the rights of shareholders in the general meeting and provides for regulatory role in the general meeting as the matter relates to exercising the rights and active participation in the works of the general meetings, however, in realty some shareholders don’t exert efforts to know their rights or willingly don’t take part in the general meetings as many shareholders speculate in the shares without adequate knowledge of the company’s projects and commercial plans which is a widespread conduct, and others lack the legal, financial and administrative knowledge to actively participate in the discussions. Normally, the companies disseminate their future plans in the general meeting and distribute brief statements that allow the ordinary person to participate in the decision making in the general meeting to protect his interests and to exercise his rights in the general meeting.