Clear days: some clarity

Clear days: some clarity

Published:

Author: Adam Dowdney

The Companies Act provisions governing the length of notice shareholders are entitled to prior to annual general meetings (AGMs) and general meetings can prove tricky to interpret.

14 or 21 days?

Companies which are required to hold AGMs by their articles of association and/or by virtue of them being public companies must give their shareholders at least 21 days' notice of those meetings. Generally, companies may call other general meetings on 14 days' notice.

Is a shorter notice period possible?

In the case of AGMs and general meetings of public companies whose shares are listed or quoted on any regulated market throughout the European Economic Area (traded companies) giving valid notice which is less than the statutory period is not permissible. However there are provisions within the Act for other types of companies to hold general meetings on shorter notice.

In the case of a public company which is not a traded company, AGMs may be validly held on less than 21 days' notice if all of the shareholders entitled to attend and vote at such meetings consent. Notice of general meetings must be at least 14 days unless those holding shares comprising at least 95% of its total nominal share capital value consent to shorter notice.

In the case of a private company, notice of general meetings must be at least 14 days unless those holding shares comprising at least 90% of its total nominal share capital value consent to shorter notice. Private companies no longer have to hold AGMs pursuant to the Act but, if they are required to hold them by their articles, then at least 21 days' notice must be given, unless shareholders representing at least 90% of total nominal share capital value consent to shorter notice.

Whatever the type of company, it is not possible for their articles of association to provide for a notice period which is shorter than the statutory minimum.

How to 'give' notice

The Act provides flexibility by allowing notice of general meetings to be validly 'given' by post, by hand, by email (or other electronic form) or through a website (provided that certain conditions are satisfied).

Although the word is used regularly throughout the Act there is no statutory definition of what it means to 'give' notice. The Act does, however, provide for when shareholders have received or are deemed to have received notice of a meeting.

How long is 14 days?

Whether 21, 14 or fewer days' notice is required, the same principles apply in relation to scheduling the earliest date that a shareholders' meeting can be held.

All notice periods for shareholders' meetings must be notice periods of 'clear' days. This means that the notice period must exclude the day on which notice is sent as well as the day on which the meeting is to be held.

If notice of a meeting is sent by post, the 'postal rule' must also be taken into account. The Act provides that all postal mail sent out by a company is only deemed to be received by its recipients 48 hours after the moment it is posted. Days, 'clear' or otherwise, usually refers to days of the week, whether working days, weekend days or bank holidays. However, the Act specifically requires that, in calculating such a 48 hour period, days that are non-business days (i.e. weekends and bank holidays) should not be counted. This means therefore that 21 clear days' notice of a general meeting will not always be the same period of notice in actual number of days and it is important to get the calculation right.

An example

'Example Limited is a private company limited by shares. On Thursday, 5 February 2015 its directors wish to send out a notice to convene a general meeting and to give the shortest possible notice of this meeting to shareholders, being 14 days. They do not think they can get consent from 90% of the shareholders to a shorter period. The notices will be sent to shareholders by post.

With a notice posted by midday on Thursday, 5 February 2015, the earliest date on which the general meeting could be held would be Tuesday, 24 February 2015 on the basis of the following:-

  • Notices are posted on Thursday, 5 February 2015
  • The 48 hours required for 'deemed receipt' under the 'postal rule' starts from the moment of posting. If we assume posting was at midday, 'deemed receipt' is midday on Monday, 9 February 2015 (i.e. excluding for the purpose of calculating the 48 hours both the Saturday and the Sunday)
  • The first clear day of the notice is therefore Tuesday, 10 February 2015
  • The fourteenth clear day of the notice is Monday, 23 February 2015
  • The general meeting may therefore be held on the following day, Tuesday, 24 February 2015
  • The total number of actual days (excluding the day on which the notice is posted and the day on which the meeting is held) will in fact therefore be 18 days

However, if the notice were instead to be posted at midday on Monday, 2 February 2015:

  • the 48 hour 'postal rule' would mean that it would be deemed given at midday on Wednesday, 4 February 2015
  • the first clear day of the notice would therefore be Thursday, 5 February 2015
  • the fourteenth clear day of the notice would be Wednesday, 18 February 2015
  • the general meeting could therefore be held on the next following day, Thursday, 19 February 2015; and
  • the total number of actual days (excluding the day on which the notice is posted and the day on which the meeting is held) will in fact therefore be 16 days