General Meetings & Board Meetings
Malta’s company law allows both local and foreign residents to hold shares in a Maltese registered company. In simple terms, shareholders are persons, whether legal or natural, who hold shares in a registered company.
The Companies Act, Chapter 386 of the Laws of Malta, provide for different types of shares which bestow upon their holders a variety of rights. These include ordinary shares and preference shares.
The responsibilities imposed on the shareholders of the company are generally linked to the rights granted through the shares held by them, for example, the right to attend and vote on resolutions taken at a general meeting. The shares of the company may also be divided into different classes granting shareholders different rights depending on the shares held by them.
A Maltese registered company acts through two principal organs, being the general meeting of the shareholders and the board of directors. The concept of a meeting may be considered as a vital device through which useful discussion and democratic control can be exercised.
During a general meeting, the shareholders of the company may pass resolutions that are binding on all members and on the company itself. The Act distinguishes between two types of general meetings, being the (i) the Annual General Meeting, which is required to be held every calendar year in addition to any other meeting which may be held during that year and (ii) the Extraordinary General Meeting.
Decisions relating to the declaration of dividends, the consideration of the annul accounts and the reports of the directors and the auditors are generally taken at the Annual General Meeting. All other decisions, which do not fall within the ambit of an Annual General Meeting, may be considered and resolved upon by the shareholders during an Extraordinary General Meeting.
A general meeting cannot be validly held unless proper notice has been given. Notice of a general meeting should be given to every shareholder of the company, even if such shareholder is not entitled to attend the meeting and vote. In practice, a notice of a general meeting is also given to the company’s auditors and directors.
The Board of Directors
The general business of a Maltese registered company is managed by its directors. It is the responsibility of the board of directors to formulate the company’s strategic direction and oversee its effective implementation. Furthermore, the directors are also responsible to promote the wellbeing, general governance and proper administration of the company and its affairs.
The directors are empowered by law to exercise all powers that do not specifically require the shareholders’ resolution at a general meeting in accordance with the company’s constitutive documentation.
The Act goes into considerable detail on the setting up of a general meeting of the shareholders, nevertheless there is very little regulation on the manner in which board meetings should be set up.
Generally, directors are allowed by the company’s constitution documentation to regulate their meetings as they deem fit. Therefore, board meetings should be held in order for the directors to take important and effective decisions. The frequency of such board meeting shall depend on the practices of the board of directors and the circumstances of the company.
The legal and corporate professionals at BDO Malta can assist clients with the setting up of shareholders’ general meetings and board meetings, which shall include the preparation of a formal notice, agenda and the drafting of the minutes of the meeting.
Our professionals can also provide clients with the necessary advice relating to the responsibilities of directors and the rights of the shareholders in specific circumstances.