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138 | Environmental and social transparency under the Companies Act 2006Annex 6: UK law governing company AGMs | 139A number of resolutions at a meeting will be proposed by the directors,relating to matters such as the appointment of auditors and the fixing oftheir fees, or the election of new directors where some are retiring. However,shareholders can also propose resolutions for AGMs if they act insufficient numbers, 344 and they may require their proposed resolution to becirculated to all those with a right to attend the meeting. 345 These memberresolutions may relate to any matter of company activity or governance,provided that: it would not, if passed, be ineffective (whether by reason ofinconsistency with any enactment or the company’s articles or otherwise);it is not defamatory of any person; and it is not ‘frivolous or vexatious’.Shareholders may also require the circulation of a statement of up to 1,000words relating to the resolution, when acting in sufficient numbers. 346This mechanism provides an opportunity for shareholders to raise environmentaland social matters for discussion and vote at the AGM, and tocirculate information to support that discussion.A.6.2.3 Matters in the business to be dealt with at the AGMEnvironmental and social matters associated with the company’s businessmay also be added to the business to be dealt with at the AGM.338A. Traded companies: members’ power to include other matters in businessdealt with at AGM(1) The members of a traded company may request the company to include in thebusiness to be dealt with at an annual general meeting any matter (other than aproposed resolution) which may properly be included in the business.(2) A matter may properly be included in the business at an annual general meetingunless –(a) it is defamatory of any person, or(b) it is frivolous or vexatious.(3) A company is required to include such a matter once it has received requests thatit do so from—(a) members representing at least 5% of the total voting rights of all the memberswho have a right to vote at the meeting, or(b) at least 100 members who have a right to vote at the meeting and holdshares in the company on which there has been paid up an average sum,per member, of at least £100.See also section 153 (exercise of rights where shares held on behalf of others).(4) A request—(a) may be in hard copy form or in electronic form,(b) must identify the matter to be included in the business,(c)(d)must be accompanied by a statement setting out the grounds for therequest, andmust be authenticated by the person or persons making it.(5) A request must be received by the company not later than—(a) 6 weeks before the meeting, or(b) if later, the time at which notice is given of the meeting.Shareholders of traded companies may require the inclusion of a specificmatter in the business to be dealt with at the AGM if they act in sufficientnumber. The number of members required is the same as that requiredto require circulation of a resolution. 347 The item of business cannot bedefamatory of any person, frivolous or vexatious.Shareholders may also require the circulation of a statement of up to 1,000words relating to that matter to be dealt with at the meeting, when actingin sufficient numbers. 348This mechanism provides an alternative opportunity for shareholders toraise environmental and social matters for discussion at the AGM.A.6.2.4QuestionsAt company AGMs, shareholders may ask questions of the directors relatingto environmental and social matters.s319A. Traded companies: questions at meetings(1) At a general meeting of a traded company, the company must cause to beanswered any question relating to the business being dealt with at the meetingput by a member attending the meeting.(2) No such answer need be given—(a) if to do so would—(i) interfere unduly with the preparation for the meeting, or(ii) involve the disclosure of confidential information;(b) if the answer has already been given on a website in the form of an answerto a question; or(c) if it is undesirable in the interests of the company or the good order of themeeting that the question be answered.Traded companies are now under a general legal duty to ensure that anyquestions from shareholders at an AGM are answered. The company isonly exempt from this duty if: to answer it would interfere ‘unduly’ withthe preparation for the meeting or involve the disclosure of confidentialinformation; the answer has already been given on a website in the form
140 | Environmental and social transparency under the Companies Act 2006Annex 6: UK law governing company AGMs | 141of an answer to a question; or ‘it is undesirable in the interests of the companyor the good order of the meeting that the question be answered’.This provision confirms the right for environmental and social mattersto be raised by individual shareholders (or proxies, see below), and placesa general statutory duty on the company to ensure that any queries areanswered, other than in particular cases.A.6.3A.6.3.1Rights of attendance at company AGMsMembers of the companyCompany AGMs are a key forum through which shareholders exercisecontrol over their investment in a public company. A central purpose ofAGMs is for directors to engage with shareholders on matters relating tothe company’s business. Despite this, there is no explicit statutory rightfor all members of the company to attend the AGM.However, in practice it would be highly unlikely and controversial for acompany to seek to disenfranchise their shareholders or a class of shareholdersfrom attending the AGM, and such restrictions would be difficultto push through the corporate structure without very broad support fromshareholders. 349A.6.3.2 Proxies appointed by a memberA member of the company who is entitled to attend the AGM also has theright to appoint a ‘proxy’ to attend the AGM in their place.s324 Rights to appoint proxies(1) A member of a company is entitled to appoint another person as his proxy toexercise all or any of his rights to attend and to speak and vote at a meeting of thecompany.(2) In the case of a company having a share capital, a member may appoint morethan one proxy in relation to a meeting, provided that each proxy is appointed toexercise the rights attached to a different share or shares held by him, or (as thecase may be) to a different £10, or multiple of £10, of stock held by him.s325 Notice of meeting to contain statement of rights(1) In every notice calling a meeting of a company there must appear, with reasonableprominence, a statement informing the member of—(a)(b)his rights under section 324, andany more extensive rights conferred by the company’s articles to appointmore than one proxy.Any person may be granted a right of access to company meetings if theyare appointed as a proxy by a shareholder with a right of access. Indeed, ashareholder who holds a number of shares may appoint multiple proxies,each attached to different shares. Companies must clearly set out the rightof shareholders to appoint proxies in the notice of the AGM.Proxies are appointed using a ‘form of proxy’, which must be deliveredto the company to be processed. In the case of traded companies, thecompany may require certain evidence as regards the proxy’s identity andauthority. In the case of all companies, the deadline for delivery of proxyforms must not be earlier than 48 hours before the meeting (excludingnon-working days). 350A.6.3.3 Representatives of corporationss323 Representation of corporations at meetings(1) If a corporation (whether or not a company within the meaning of this Act) isa member of a company, it may by resolution of its directors or other governingbody authorise a person or persons to act as its representative or representativesat any meeting of the company.Where a corporation is a shareholder, it may authorize a person or multiplepersons to act as representative(s) at the AGM.A.6.3.4The mediaThe media have no statutory right of access to company AGMs. In practicethey usually are allowed access, and some companies even have a rightof access entrenched in their articles of association. However, whetherthe media are given access or not is left to the discretion of the individualcompany.A.6.3.5 GuestsCompanies may voluntarily allow guests to attend AGMs. There is nolegal provision for this.
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ClientEarthBen Bundock | Tim Malloc
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