Company Law Column part 6 General Meeting of Shareholders（１）
1．General Meeting of Shareholders
General Meeting of Shareholders is the Company’s highest decision-making body where shareholders exercise. In Japan as well as in Malaysia it plays an important role under the Companies Act. A resolution of the General Meeting of Shareholders is required in the event decision-making for a certain matter is conducted under Malaysia Company Law. In addition, the General Meeting of Shareholders is not specified in Company Law may result in the invalid. It is important to ensure the regulation of Company Law.
In this column, therefore, I would like to explain the basic procedure of the General Meeting of Shareholders.
2．The Ordinary General Meeting of Shareholders
（１）Unlisted companiesThe Ordinary General Meeting of Shareholders is the General Meeting of Shareholders which is held at a certain period of time after ending each fiscal year. Unlisted companies are approved, under the company law, for the resolution of written statements as well as holding the Ordinary General Meeting of Shareholders（Paragraphs 1 of Article 290）
（２）Listed companiesListed companies are required to hold the Ordinary General Meeting of Shareholders ( Paragraphs 2 of Article 290). The Ordinary General Meeting of Shareholders for listed companies are
1. Audited financial statements and financial reports should be submitted
2. Re-election of Director
3. Election of Director and finalization of compensation
4. Decision-making or business required the notice based on Company Law or the Article of Incorporation shall be resolved (Paragraphs 1 of Article 340).
As shown below, the approval of the Ordinary General Meeting of Shareholders is required by the Company Law.
In the event the listed company is newly established, the General Meeting of Shareholders shall be held within 18 months after establishment (Paragraphs 3 of Article 340) and thereafter shall be held At certain times of the year.
Annual General Meeting of Shareholders is basically;
1. General Meeting of Shareholders until the end of a fiscal year which will end within six months and
2. Within 15 months from the last Ordinary General Meeting (Paragraphs 2 Article 340）.
A notice of the convocation of Ordinary General Meeting of Shareholders shall be dispatched at least 21 days prior to the date of such a meeting provided unless otherwise specified in the articles of incorporation (Paragraphs 2 Article 316, 321). Such notice period may be shortened in the case all shareholders with voting rights of the company agree with（Paragraphs 3 Article 316）
（１）A notice of ConvocationIn the event the Ordinary General Meeting of Shareholders is held, a notice of convocation shall be sent to 1. Shareholders 2. Directors 3. Auditors (Paragraphs 1 Article 321). However, Auditors shall not take on any obligation to attend the General Meeting of Shareholders, except;
1. Ordinary General Meeting is held at listed companies
2. Accounting matters shall be resolved such as voting on resolutions for financial statements at unlisted companies(Article 285).
Notices of the convocation of the General Meeting of Shareholders shall be rendered in a written statements such as mail, email, or website (Article 319). In case notices of convocation are published on the website, written statements stating “the notices will be available on the website” shall be sent to shareholders by mail or email in advance (Article 320).
Notices of convocation, in case of unlisted companies, shall be sent to shareholders no less than 14 days prior to ordinary resolutions (Paragraphs 1, Article 316), 21 days prior to special resolutions (Paragraph 1, Article 292) unless otherwise provided the number of days or the date. Notice of convocation, in case of listed companies, shall be sent to shareholders no less than 21 days prior to ordinary resolutions, no less than 14 days prior to any other resolutions except when otherwise long terms are stipulated under the Article (Paragraph 2, Article 316). Notices of convocation shall be sent to shareholders no less than 21 days prior to special resolutions (Paragraph 1, Article 292).
The notice shall state:
1. Date and place where the meeting is to be held
2. The proposal of the General Meeting of Shareholders (Article 317).
The convenor shall be adapted in Malaysia for shareholders holding 10% or more of shares issued (Article 310).
The convenor shall be adapted for shareholders holding 10% or less of shares issued where it is otherwise specified in the articles of incorporation. However, according to the judicial precedents,¹ the articles of incorporation removing the adoption of Article 310 shall not be prescribed.
On the other hand, in the event that shareholders with more than 10% of voting rights demand General Meeting of Shareholders, Director may convene the meeting within 14 days after the request was submitted, the meeting may be held within 28 days after the request was accepted (Article 311, Paragraph1, Article 312). Director may not convene in cases that it is necessary to hold the said meeting, shareholders who made the request and shareholders who have majority of the total voting rights of the Company have the right to convene the meeting (Paragraph 1, Article 313).
Shareholders holdings more than 5% of voting rights, in case of unlisted companies, have the right to convene the meeting for the Director once 12 months has passed after the meeting under Article 311 ended and in case it is not improper activities such as abusive purposes (Paragraph 4, Article 311).
※１ Indian Corridor Sdn Bhd & Anor v. Golden Plus Holdings Bhd (Malaysia Court of Appeal, 2008)
4．Minutes and Resolution of General Meeting of Shareholders
（１）MinutesThe Chairman is appointed in order to conduct the meeting smoothly at the General Meeting of Shareholders. The Chairperson of the Board of Directors serves as a Chairman, however, other person may serve where special provisions exist in the Articles of Incorporation (Paragraph 1, Article 329). In case no Chairman is specified in the Articles of Incorporation or the Chairman does not perform his/her duties, shareholders have the right to appoint the Chairman at the meeting（Paragraph2, Article329）.
The proxy may be appointed as a Chairman by resolution of the meeting only in the case where it is not prohibited under articles of incorporation (Article336).
（２）The methods of resolution
A) The methods of ResolutionOrdinary resolution and special resolution are defined. In Malaysia, there are voting and vote on a show of hands.
In the case of voting, voting rights shall be exercised based on company shares held by shareholders. In the case of a vote on a show of hands, on the other hand, voting rights shall be exercised based on a number of shareholders (one person, one vote).
B) Ordinary resolutionAdoption of ordinary resolutions, shareholders with voting rights and a majority of the votes for the proposal by such shareholders are required (Paragraph1, Article291).
When resolutions are taken on a show of hands, shareholders with voting rights or a majority of the votes for the proposal by their proxies are required (Paragraph 2, Article 291). When resolutions are taken by voting, ordinary resolution shall be approved if the majority vote in favor by said shareholders at the meeting. Votes of proxies are included above (Pararaph3, Araticle291).
Resolutions shall be made by ordinary resolutions unless as otherwise provided by Article of Incorporations and Company Law under Malaysian Company Law (Paragraph 3, Article 290). Reappointment and dismissal of Director, issuance of shares and the disposal of important assets shall be approved by ordinary resolutions. Share split and share consolidation shall be also approved by ordinary resolutions under the revised Company Law in 2019.
C) Issuance of Shares by Special Resolution
When resolutions are taken on a show of hands, special resolutions shall be approved when more than 75% of shareholders entitled to exercise their voting rights approve (Paragraph 1, Article 292) in Malaysia. When resolutions is taken by voting, special resolutions shall be approved when shareholders and more than 75% of proxies approve. On the other hand, special resolutions shall be approved when affirmative votes are 75%. Proxies are included above (Paragraph 3, Article 292).
The change of name of the Company, change of Articles of Incorporation, capital reduction procedure and liquidation proceedings made by shareholders are approved under the Company Law.
When Special resolution is made, notice stating special resolution is shall be sent to shareholders at least 21 days prior to the scheduled resolution. If resolutions are made without any prior notices, it shall not be considered special resolutions (Paragraph 1, 5, Article 292).
（３）Resolutions in writtenWhen resolution in written is adopted, requirements for special resolutions shall obtain signature（Paragraph 4, Article 306）.
Resolution in written shall be approved only for unlisted companies under Company Law（Paragraph 1, Article 97）, however, it may not approved for 1. Dismissal of Director 2. Dismissal of Auditors (Paragraph 2, Article 297). It is thought it might be desirable for discussion over dismissal of boards at the meeting.
Resolution in written shall be made within 28 days after written notice is sent to shareholders who entitle to exercise voting rights in writing unless otherwise specified any special clauses for periods on the Articles of Incorporation. Signature after 28 days shall be invalid (Paragraph 1, 2, Article 307).
（４）The method of resolution is not specified under Company LawIn case the way of resolution is not specified under Company law, said resolution shall be considered an ordinary resolution (Paragraph 3, Article 290). However, it may be special resolutions if special clause is specified in the Articles of Incorporation.
Note: This translation has been prepared by eeevo malaysia Sdn Bhd. In the event of a discrepancy between the English version and the Japanese version of the Terms, the Japanese-language version shall prevail.
For your reference, please click below
All data and commentary included in this material was edited and written by Legal Professional Corporation One Asia based on published information at the time of this material creation, but it does not guarantee its accuracy and completeness. In addition, we are not responsible for any damage caused by using the information in this material.
One Asia Lawyers details as below:
See One Asia Lawyers detail
◆One Asia Lawyers◆
"One Asia Lawyers" is the first ASEAN legal specialization in Japan, which was established in order to offer advice on legislation in Japan and ASEAN countries, including Malaysia. For inquiries regarding this article, please send in email to email@example.com