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What is a general assembly? What are the types of public meetings?

What is a general assembly? What are the types of public meetings?
  • What is a general assembly?
  • Types of public meetings in joint stock companies and their duties


What is a general assembly?

The general assembly is a gathering of shareholders of joint-stock companies in order to make decisions about important issues such as how to operate, determine regulations and methods of management and liquidation of these companies. The quorum of shareholders present in the general assembly and the total number of votes required to make important decisions in these assemblies are determined in the articles of association of joint stock companies. Except in cases where a special task is considered by the law.

The general assembly is considered to be one of the most important pillars of a joint-stock company and, in fact, its power center. This assembly is the only channel through which the shareholders can use their voting rights to express opinions in the process of the company’s management. Assemblies in joint-stock companies can be held in three forms: founding general assembly, ordinary general assembly, and extraordinary general assembly.

Founding General Assembly

The founder’s general assembly is formed before the establishment of joint stock companies and with the presence of all investors, i.e. founders and underwriters. In this assembly, each share has one voting right. In public companies, it is mandatory to hold a founding general assembly; But in private joint-stock companies, this is not required. The quorum for the establishment of the founding general assembly is such that at least half of the company’s capital suppliers must be present.

If the desired majority is not achieved, it will be possible to hold a founding general assembly for the said company up to two more times. It should be noted that at least 20 days before the holding of each of these appointments, the invitation notice must be published in the multi-circulation daily newspaper specified in the subscription notice.

The second and third rounds will be official when at least one-third of the company’s capital suppliers are present and decisions will be made with a majority of two-thirds of the votes of those present. By convening the meeting, the audience decides to elect a Sunni leader from among themselves. It should be noted that if the quorum is not reached in the third round, the founders of the joint stock company will announce the non-establishment of the company.

What are the duties of the founding general assembly?

  • Electing board members, including a chairman, a secretary and two supervisors, taking into account the majority of votes
  • Approving or amending the articles of association of a joint stock company
  • Reviewing the report of the founders regarding non-cash contributions and claimed benefits
  • Underwriting all the bonds and shares of the company and ensuring the payment of at least 35% of the obligations of the underwriters.
  • Determining a multi-circulation newspaper in order to publish notices and invite shareholders to the upcoming general meeting

Ordinary General Assembly

In joint stock companies, all partners should be aware of the decisions made by the managers. All shareholders also want to get information about the general affairs of the company and express their opinion in this regard. The only bridge between partners and shareholders of the company is ordinary and extraordinary general meetings.

The ordinary general meeting is one of the most important types of meetings in terms of application, which should be held at least once a year. A joint-stock company is allowed to hold several ordinary general meetings in a year, but in any case, the time of its holding should be specified in the company’s articles of association so that the shareholders are informed about it and prepare themselves to attend it. The time of holding the ordinary general meeting may be exactly Or be mentioned in the statute as a period of time. But in any case, the regular general meeting should be held no later than four months after the end of the company’s financial year.

During the holding of the ordinary general meeting, the board of directors should invite the shareholders through the publication of an advertisement in the widely circulated newspaper designated for this purpose. It should be noted that between the time of publication of the invitation and the holding of the assembly, there should be no less than ten days and no more than forty days. If the board of directors does not invite the shareholders within the stipulated time, the inspector or inspectors should do so personally.

Otherwise, shareholders who own more than one-fifth of the company’s shares can invite other shareholders. If in the first invitation, the quorum of shareholders, which is equal to half of them, is not reached, the next meeting will be formal with the presence of any number of them, and the voting rights of each shareholder will be proportional to the number of shares. Matters raised in the ordinary general assembly will be approved by a majority plus one vote of the audience.

What are the duties of the ordinary general assembly?

  • Selection of managers (with a service limit of two years) except for the first managers
  • Selection of auditors other than the first auditors as well as alternate auditors to monitor the performance of the board of directors
  • Determination of bonuses for board members and fees for auditors
  • Dealing with financial affairs, approving the balance sheet and determining how to distribute profits among shareholders
  • Determining one of the widely circulated newspapers to publish company announcements and announcements until the next general meeting

Extraordinary General Assembly

When extraordinary things happen in the company that are neither related to the establishment of the company nor to its current affairs, it becomes necessary to hold an extraordinary general assembly. For example, in the article “Types of capital increase”, it was mentioned that when companies increase their capital, they should put it to the shareholders’ vote in the extraordinary general meeting. The presence of more than half of the shareholders with voting rights is necessary in order to hold an extraordinary general meeting.

If the number of attendees does not reach the quorum in the first call, a second call must be made to the shareholders, and the meeting will become official with the presence of more than a third of them. If the number of attendees does not reach the quorum in the second invitation, the issue will be temporarily dismissed. If the assembly is held in any of the above two occasions, the decisions and proposals will be approved and formalized by obtaining two-thirds of the votes of the audience.

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