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09 September
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General Assemblies

Posted by cxxsx
in Blog
الجمعيات العامة للشركات - General assemblies of companies

General assemblies of companies are considered one of the most important methods through which shareholders or partners exercise their powers and determine their rights. General assemblies are divided into ordinary and extraordinary general assemblies, each of which is held according to the matters presented to it on its agenda, and in accordance with the provisions of the Law of Joint Stock Companies, Partnerships Limited by Shares, Limited Liability Companies, and One Person Companies No. 159 of 1981 (Companies’ Law) and its executive regulation.

In all cases, general assemblies shall be chaired by the Chairman of the Board of Directors or one of the managing partners appointed by the Company’s Articles of Association (AoA), as the case may be. At the beginning of the meeting, the Chairman of the assembly shall appoint a Secretary and two vote tellers, provided that the assembly approves their appointment. They may be appointed among third parties other than shareholders unless the AoA stipulate otherwise.

Ordinary General Assembly

Article No. (61) of the Companies Law states that “The General Assembly of Shareholders shall be convened by invitation of the Chairman of the Board of Directors at the time and place specified by the AoA. The Assembly shall be held at least once a year within the three months following the end of the Company’s fiscal year.”

The Ordinary General Assembly meeting (OGM) shall not be valid unless attended by shareholders representing at least a quarter of the capital, unless the AoA stipulate a higher percentage, provided that it does not exceed half of the capital. If the legal quorum is not met, a second meeting shall be held, and the second meeting shall be valid regardless of the number of attendees.

Shareholders or partners may attend the OGM in person or by proxy, and shall be proven by a power of attorney or written authorization.

1- Authorities notified by the invitation of OGM:

The General Authority for Investment and Free Zones (GAFI), Company’s management, the auditor and the legal representative shall be notified with a copy of the invitation that the company sends to shareholders or partners to attend the OGM, or publishes thereof, on the same date of the announcement.

A copy of the financial statements and the Board of Directors’ report shall be sent to each of the authorities referred to in the previous paragraph, along with a copy of the notification of the invitation of the OGM scheduled to consider these documents.

2- The competence of OGM:

Article (63) of the Companies’ Law and Article (216) of its Executive Regulation specifies the matters that the OGM has competence to consider and discuss the following:

  • Electing and dismissing members of the Board of Directors.
  • Monitoring the work of the Board of Directors and considering its release from liability.
  • Approving the financial statements.
  • Approving the Board of Directors’ report on the company’s activity.
  • Approving the distribution of profits.
  • Everything that the Board of Directors, the competent administrative body, or shareholders who own 5% of the capital deem necessary to present to the OGM.
  • It is also concerned with everything stipulated by the law and the AoA.

3- Other competences of the OGM:

Article No. (217) of the Executive Regulations of the Companies Law determined other powers for the OGM to consider the following matters at its annual meeting:

First: Financial matters:

  • Stop reserving the legal reserve if it reaches half of the issued capital.
  • Creating reserves other than the legal reserve and the statutory reserve.
  • Disposing of reserves and allocations for purposes other than their intended use.
  • Approving the distribution of a percentage of the net profits achieved by the company as a result of selling or compensating for a fixed asset, provided that this does not result in the company not being able to restore its assets to what they were.
  • Approving the issuance of bonds and approving the guarantees determined for their holders.
  • Considering the decisions and recommendations issued by the bondholders group.
  • Authorization in advance for managers or members of the Board of Directors to conclude compensation contracts with the company, provided that the authorization including each contract separately.
  • Authorizing the Board of Directors to make a donation whenever its value exceeds 1,000 EGP (one thousand Egyptian pounds).

Second: Matters related to the company’s Board of directors:

  • Dismissing the directors or the board of directors, or one of its members, even if this is not included in the agenda, and filing a liability lawsuit against.
  • Dismissing directors or members of the Board of Directors who repeatedly fail to attend the General Assembly and electing others.
  • Imposing a financial fine on the directors or members of the Board of Directors who did not attend the meeting without an acceptable excuse.
  • Permitting to the managing director of the Board of Directors to occupy the position of managing director in another company.
  • Permitting a member of the Board of Directors to perform technical or administrative work in another joint stock company on a permanent basis.
  • Permitting the director or a member of the board of directors to trade for his own account or for the account of others in one of the branches of activity practiced by the company.
  • Respond to any management action if the directors or the Board of Directors are unable to decide on it due to lack of a quorum.
  • Approval of any action issued by the Board of Directors.
  • Issuing recommendations regarding actions that fall within the jurisdiction of managers or the Board of Directors.

Third: Matters related to the auditor:

  • Consider changing the auditor during the fiscal year for which he was appointed.
  • Consider dismissing the auditors and filing a liability lawsuit against them.
  • Considering the auditor’s report in the event that he is not able to perform his task.

Fourth: Matters related to the liquidation of the company:

  • Appointing liquidators, determining their fees, and dismissing them.
  • Extending the period prescribed for liquidation after reviewing the liquidator’s report.
  • Consider the temporary account submitted by the liquidator every six (6) months.
  • Approval of the final account of the liquidation work.
  • Determine the place where the company’s books and documents are kept after its removal from the commercial register.

Extraordinary General Assembly

The Extraordinary General Assembly Meeting (EGM) shall be competent to amend the AoA, provided that this does not result in an increase in the obligations of shareholders/partners. Any decision issued by the General Assembly that would affect the basic rights of the shareholder derived from his capacity as a partner in the company shall be null and void.

1- The invitation for Extraordinary General Assembly:

The Board of Directors in joint stock companies, and the partners in Limited liability companies may decide to call for an Extraordinary General Assembly Meeting EGM.

The Board of Directors or the partners must call for an EGM if requested by a number of shareholders or partners representing at least 10% of the company’s capital.

If the Board of Directors or the partners do not invite for a meeting within one (1) month from submitting the application, the shareholders or partners may apply to GAFI, which is responsible for sending the invitation.

2- The competence of Extraordinary General Assembly:

The EGM shall consider the following amendments to the AoA:

  • Increasing or decreasing the authorized capital.
  • The Approval of increasing capital with preferred shares.
  • Adding complementary or related purposes to the company’s original purpose or amending Company’s activity.
  • Amending the rights, privileges or restrictions related to the types of shares.
  • Prolonging or shortening the company’s period, dissolving it prematurely, changing the percentage of loss resulting in the forced dissolution of the company, or merging the company.
  • Changing the legal form of the company.

Dissolving the company or its continuity, if the company’s loss in one fiscal year or more amount of half the value of shareholders’ equity according to the company’s latest approved annual financial statements.

3- The quorum for the validity of the EGM and voting:

The EGM shall not be valid unless it is attended by shareholders or partners representing at least half of the capital. If the minimum percentage doesn’t attend at the first meeting, the invitation for second meeting shall be held within the thirty (30) days following the first meeting. The second meeting shall be valid if it was attended by a number of shareholders representing at least a quarter of the capital.

The decisions of the EGM are issued by a Two-thirds majority of the shares and capital shares represented at the meeting, unless the decision relates to increasing the authorized capital, decreasing the company’s capital, dissolving the company before its expiration date, changing its purpose, merging or dividing it, in which case the decision shall be issued by a three-quarters majority of the shares and capital shares represented at the meeting to be valid.