General Assembly in Joint-Stock Companies: Types, Procedures, and Regulations
?Q1: What is the General Assembly
A company's General Assembly, which is made up of its shareholders, is its highest authority. The law requires a legal quorum for its validity, which must not be less than a specified number. The right to attend the General Assembly and cast a vote on its decisions belongs to every shareholder
?Q2: What are the types of General Assemblies for joint-stock companies
In the case of joint-stock companies, there are three different kinds of general assemblies: founding, extraordinary, and ordinary. All matters pertaining to the company, excluding those set aside by statute or the company's bylaws for the Extraordinary General Assembly, are under the purview of the Ordinary General Assembly. The company's founding, auditor appointments, and, if needed, board of director elections fall under the purview of the Founding General Assembly
?Q3: How is the Ordinary General Assembly convened
The company's Board of Directors calls a meeting of the Ordinary General Assembly of shareholders at the location and time designated by the bylaws and within four months of the fiscal year's conclusion. The assembly may be called at any time the Board thinks fit
?Q4: Can the auditor call the General Assembly to convene
The Board of Directors convenes the Ordinary General Assembly, as was previously mentioned. On the other hand, the auditor has the right to call the meeting directly if the Board refuses to call it within fifteen days of the auditor's request
Q5: May the General Assembly be called to order by the Securities and Commodities Authority
Following consultation with the appropriate authority, the Securities and Commodities Authority may convene the General Assembly in the following situations
If the meeting is scheduled but has not been called after thirty days
If there are fewer Board members than what is necessary for a meeting to be considered legitimate
Should the company's bylaws or the law be broken, or should there be a management issue within the organization؟
?Q6: How is the invitation to the General Assembly issued
After receiving approval from the Securities and Commodities Authority, the invitation must be sent by registered mail to every shareholder and through an announcement in two Arabic-language daily local newspapers at least twenty-one days before the planned date. The agenda should be announced, and a copy of the invitation should be forwarded to the appropriate authority as well as the Securities and Commodities Authority
?Q7: What is the agenda of the Ordinary General Assembly and what does it include
The items on the agenda are those that will be covered during the meeting, such as
Considering and approving the auditor's report and the Board's report on the company's operations and financial status for the year
Discussing and approving the company's balance sheet and profit and loss account
Appointing auditors and setting their fees, if not otherwise specified in the company's bylaws, as well as electing Board members as needed
Taking the Board's suggestions regarding profit sharing into account
Eliminating the Board members' and auditors' liability or, if appropriate, choosing whether to pursue liability claims against them
?Q8: Are there any penalties for shareholders who do not attend the General Assembly
Shareholders who do not show up for the General Assembly will not be penalized, but they will not be able to voice their objections to decisions that they believe go against their interests or participate in the assembly's decision-making process
?Q9: Is it allowed to appoint a proxy to attend the General Assembly
It is possible for a shareholder to name another individual to represent them at the General Assembly through a written proxy. The proxy should not own more than 5% of the company's capital, with the exception of legal entity representatives. Legal guardians represent minors and people who are incapable of making decisions for themselves
?Q10: Who presides over the General Assembly meeting
The General Assembly is presided over by the Board's Chairman, their deputy, or another person selected by the Board. The assembly chooses a chairman from among the shareholders if any of these are not present. The assembly also appoints a secretary for the meeting. If the meeting concerns a matter related to the chairman, the assembly must choose a chairman from among the shareholders
?Q11: What is meant by a legal quorum
The number of shares that represent the company's capital that must be present for a General Assembly meeting to be valid, whether it be founding, regular, or extraordinary, is referred to as a legal quorum
?Q12: When is the legal quorum for Ordinary General Assemblies considered valid
Only when at least half of the company's capital is represented by shareholders is an Ordinary General Assembly deemed legitimate. If this quorum is not reached at the first meeting, another meeting must be called within thirty days of the first, and any number of people attending the second meeting does not matter. A unanimous vote of all the shares present at the meeting constitutes a majority vote in the General Assembly
?Q13: Can the General Assembly discuss matters not listed on the agenda
Issues not on the approved agenda are off limits to discussion by the General Assembly. Nonetheless, it might take up urgent matters brought up in the meeting or requests from one or more shareholders who hold at least 10% of the company's stock. In the absence of a response from the Board, the assembly may choose to address these issues
?Q14: Does a shareholder have the right to discuss agenda items
Absolutely, all shareholders are entitled to ask questions of the board members and to discuss the matters on the agenda of the general assembly. The Board must answer the questions so long as it does not interfere with the interests of the company. If the shareholder finds the response insufficient, they may appeal to the General Assembly, whose decision is final. Any clause in the company's bylaws contradicting this is void
?Q15: How are decisions of the General Assembly voted on
The bylaws of the company specify the voting procedure for the General Assembly. When it comes to the appointment, removal, or responsibility of Board members, voting has to take place in secret. Board members are not allowed to vote on decisions related to discharging them from responsibility, personal interests, or disputes with the company
?Q16: Are the proceedings of the General Assembly meeting recorded? How
The General Assembly meeting is documented, along with the names of the shareholders who attended or were represented, the number of shares they own, the number of votes they were allotted, the resolutions that were approved, and the votes cast in favor of and against them. The minutes of the meeting are recorded regularly in a journal and signed by the chairman, the secretary, and the vote collector. The signatories are responsible for the accuracy of the information
Q17: Are the decisions of the General Assembly binding on those who did not attend or opposed them?
The decisions of the General Assembly are binding on all shareholders, whether present at the meeting or absent, and whether they agree with the decisions or not. The Chairman of the Board must implement the decisions and provide copies to the Securities and Commodities Authority and the relevant authority within fifteen days of the decision.
Q18: What is the role of the relevant authority in implementing General Assembly decisions?
The Chairman of the Board is responsible for implementing General Assembly decisions and must provide copies to both the Securities and Commodities Authority and the Investment Authority within fifteen days of the decision.
?Q19: Can General Assembly decisions be annulled
Decisions made for the benefit of a specific group of shareholders or to harm them, or to benefit Board members or others without considering the company's interests, can be annulled
Q20: What are the consequences of a court ruling to annul General Assembly decisions?
A court ruling of annulment means that the decision is considered void for all shareholders, and the Board must publish the annulment judgment in two daily local newspapers in Arabic
?Q21: When does the right to challenge General Assembly decisions expire
The right to challenge General Assembly decisions expires one year from the date the contested decision was made. Filing a lawsuit does not suspend the decision's implementation unless ordered by the court
؟Q22: What are the functions of the Extraordinary General Assembly
The Extraordinary General Assembly is responsible for
Amending the company's Articles of Association and bylaws
Increasing or decreasing the capital, dissolving the company, or merging it with another company
Selling or disposing of the company's project
Extending the company's duration
Q23: Does the Extraordinary General Assembly have unlimited authority to amend the company’s bylaws؟
The Extraordinary General Assembly cannot make amendments that increase the shareholders' burdens, alter the company's main purpose, or relocate the company's headquarters to another country. Any provision to the contrary is considered null and void
?Q24: Who has the right to call an Extraordinary General Assembly
The Extraordinary General Assembly can only be convened by the Board of Directors. If a group of shareholders representing at least 40% of the company's capital requests a meeting, the Board must call the meeting within fifteen days of the request. If the Board fails to do so, the requesting shareholders can appeal to the Securities and Commodities Authority to issue
the invitation after consulting with the relevant authority
Q25: Does a representative of the Authority or relevant authority have the right to vote at
the meeting؟
Representatives of the Securities and Commodities Authority and the relevant authority can attend the meeting but do not have the right to vote. Their attendance is recorded in the meeting minutes
?Q26: What is the legal quorum for an Extraordinary General Assembly
An Extraordinary General Assembly is valid only if attended by shareholders representing at least three-quarters of the company's capital. If this quorum is not met, a second meeting should be called within thirty days, and this second meeting is valid if attended by shareholders representing half of the company's capital. If this quorum is not met in the second meeting, a third meeting should be called after thirty days, and this third meeting is valid regardless of the number of attendees. However, decisions in the third meeting are not effective without the approval of the relevant authority
?Q27: What is meant by majority decisions
Decisions are made by a simple majority, meaning that the number of votes in favor of a decision must exceed the number of votes against it. The company's bylaws may specify different types of majorities for different matters
Q28: What are the procedures to follow if the Chairman of the Board cannot attend the ?General Assembly
If the Chairman of the Board cannot attend the General Assembly, their deputy presides over the meeting. If neither the Chairman nor the deputy can attend, the Board must appoint a temporary chairman from among the attending members
?Q29: What are the procedures to postpone the General Assembly
The General Assembly can be postponed by a decision of the Board of Directors or at the request of shareholders, provided that all shareholders are notified of the postponement and its reasons at least 21 days before the new date
?Q30: Can shareholders propose new items to the agenda
Yes, shareholders can propose new items to the agenda, provided that the proposals are submitted before the General Assembly meeting in a timely manner, as specified in the company's bylaws
?Q31: What documents are required to attend the General Assembly
Shareholders must present their personal identification cards and any documents proving their share ownership. Proxies must present an official power of attorney that proves their authorization.
?Q32: How are shareholder objections to General Assembly decisions handled
Shareholders can submit objections to General Assembly decisions by filing complaints with the company's management or the relevant authority within a specified period after the decisions are made. The objections are reviewed according to legal regulations.
?Q33: Can the General Assembly be held electronically
Yes, the General Assembly can be held electronically if this is specified in the company's bylaws. Legal procedures regarding the technology used and ensuring correct voting by shareholders must be followed.
?Q34: What are the penalties for violations during the General Assembly
Penalties for violations can include financial fines, invalidation of the violations, or restrictions on shareholders' rights, and may extend to legal accountability for Board members.
Q35: What is the grace period for registering shareholder objections to the General ?Assembly minutes
Shareholders can register objections to the General Assembly minutes within thirty days from the meeting date. After this period, the minutes are considered approved.
?Q36: What role does the auditor play in the General Assembly
The auditor provides a detailed report on the company's financial condition and has the right to attend the General Assembly, discuss the report with shareholders, and answer their questions.
Q37: What are the responsibilities of Board members regarding General Assembly ?decisions
Board members must implement General Assembly decisions in good faith and according to the law and the company's bylaws, and they must inform shareholders of any related actions or changes.
?Q38: How is the company's Articles of Association amended
Amendments to the Articles of Association are made through an Extraordinary General Assembly after obtaining a specific majority approval as outlined in the company's bylaws. The amendments must be documented and reported to the relevant authorities.
?Q39: Can shareholders challenge General Assembly decisions
Yes, shareholders can challenge General Assembly decisions before the competent court if they believe the decisions are contrary to the law or the company's bylaws, or infringe upon their rights as shareholders.
?Q40: What are the consequences of a court ruling to annul General Assembly decisions
A court ruling of annulment means the decision is void for all shareholders, and the Board must publish the annulment judgment in two daily local newspapers in Arabic.
?Q41: When does the right to challenge General Assembly decisions expire
The right to challenge General Assembly decisions expires one year from the date the contested decision was made. Filing a lawsuit does not suspend the decision's implementation unless ordered by the court.
?Q42: What are the functions of the Extraordinary General Assembly
The Extraordinary General Assembly is responsible for
Amending the company's Articles of Association and bylaws
Increasing or decreasing the capital, dissolving the company, or merging it with another company
Selling or disposing of the company's project
Extending the company's duration
Q43: Does the Extraordinary General Assembly have unlimited authority to amend the ?company’s bylaws
The Extraordinary General Assembly cannot make amendments that increase shareholders' burdens, alter the company's primary purpose, or relocate the company's headquarters to another country. Any provision to the contrary is considered null and void
Q44: Who has the right to call an Extraordinary General Assembly?
The Extraordinary General Assembly can only be convened by the Board of Directors. If a group of shareholders representing at least 40% of the company's capital requests a meeting, the Board must call the meeting within fifteen days of the request. If the Board fails to do so, the requesting shareholders can appeal to the Securities and Commodities Authority to issue the invitation after consulting with the relevant authority.
Q45: Do representatives of the Authority or relevant authority have the right to vote at the meeting?
Representatives of the Securities and Commodities Authority and the relevant authority can attend the meeting but do not have the right to vote. Their attendance is recorded in the meeting minutes
?Q46: What is the legal quorum for an Extraordinary General Assembly
An Extraordinary General Assembly is valid only if attended by shareholders representing at least three-quarters of the company's capital. If this quorum is not met, a second meeting should be called within thirty days, and this second meeting is valid if attended by shareholders representing half of the company's capital. If this quorum is not met in the second meeting, a third meeting should be called after thirty days, and this third meeting is valid regardless of the number of attendees. However, decisions in the third meeting are not effective without the approval of the relevant authority
?Q47: What is meant by majority decisions
Decisions are made by a simple majority, meaning that the number of votes in favor of a decision must exceed the number of votes against it. The company's bylaws may specify different types of majorities for different matters.
Q48: What are the procedures to follow if the Chairman of the Board cannot attend the ?General Assembly
If the Chairman of the Board cannot attend the General Assembly, their deputy presides over the meeting. If neither the Chairman nor the deputy can attend, the Board must appoint a temporary chairman from among the attending members
Q49: What are the procedures to postpone the General Assembly?
The General Assembly can be postponed by a decision of the Board of Directors or at the request of shareholders, provided that all shareholders are notified of the postponement and its reasons at least 21 days before the new date
Q50: Can shareholders propose new items to the agenda?
Yes, shareholders can propose new items to the agenda, provided that the proposals are submitted before the General Assembly meeting promptly, as specified in the company's bylaws.
Q51: What documents are required to attend the General Assembly?
Shareholders must present their identification cards and any documents proving their share ownership. Proxies must present an official power of attorney that proves their authorization
?Q52: How are shareholder objections to General Assembly decisions handled
Shareholders can submit objections to General Assembly decisions by filing complaints with the company's management or the relevant authority within a specified period after the decisions are made. The objections are reviewed according to legal regulations
Q53: Can the General Assembly be held electronically?
Yes, the General Assembly can be held electronically if this is specified in the company's bylaws. Legal procedures regarding the technology used and ensuring correct voting by shareholders must be followed
Q54: What are the penalties for violations during the General Assembly?
Penalties for violations can include financial fines, invalidation of the violations, or restrictions on shareholders' rights, and may extend to legal accountability for Board members
Q55: What is the grace period for registering shareholder objections to the General Assembly minutes?
Shareholders can register objections to the General Assembly minutes within thirty days from the meeting date. After this period, the minutes are considered approved
Q56: What role does the auditor play in the General Assembly?
The auditor provides a detailed report on the company's financial condition and has the right to attend the General Assembly, discuss the report with shareholders, and answer their questions
Q57: What are the responsibilities of Board members regarding General Assembly decisions?
Board members must implement General Assembly decisions in good faith and according to the law and the company's bylaws, and they must inform shareholders of any related actions or changes
Q58: How is the company's Articles of Association amended?
Amendments to the Articles of Association are made through an Extraordinary General Assembly after obtaining a specific majority approval as outlined in the company's bylaws. The amendments must be documented and reported to the relevant authorities
Q59: Can shareholders challenge General Assembly decisions?
Yes, shareholders can challenge General Assembly decisions before the competent court if they believe the decisions are contrary to the law or the company's bylaws, or infringe upon their rights as shareholders
Q60: What are the consequences of a court ruling to annul General Assembly decisions?
A court ruling of annulment means the decision is void for all shareholders, and the Board must publish the annulment judgment in two daily local newspapers in Arabic
Q61: When does the right to challenge General Assembly decisions expire?
The right to challenge General Assembly decisions expires one year from the date the contested decision was made. Filing a lawsuit does not suspend the decision's implementation unless ordered by the court.
Q62: What are the functions of the Extraordinary General Assembly?
The Extraordinary General Assembly is responsible for
Amending the company's Articles of Association and bylaws
Increasing or decreasing the capital, dissolving the company, or merging it with another company
Selling or disposing of the company's project
Extending the company's duration
Q63: Does the Extraordinary General Assembly have unlimited authority to amend the company’s bylaws?
The Extraordinary General Assembly cannot make amendments that increase shareholders' burdens, alter the company's primary purpose, or relocate the company's headquarters to another country. Any provision to the contrary is considered null and void
Q64: Who has the right to call an Extraordinary General Assembly?
The Extraordinary General Assembly can only be convened by the Board of Directors. If a group of shareholders representing at least 40% of the company's capital requests a meeting, the Board must call the meeting within fifteen days of the request. If the Board fails to do so, the requesting shareholders can appeal to the Securities and Commodities Authority to issue the invitation after consulting with the relevant authority
Q65: Do representatives of the Authority or relevant authority have the right to vote at the meeting?
Representatives of the Securities and Commodities Authority and the relevant authority can attend the meeting but do not have the right to vote. Their attendance is recorded in the meeting minutes
Q66: What is the legal quorum for an Extraordinary General Assembly?
An Extraordinary General Assembly is valid only if attended by shareholders representing at least three-quarters of the company's capital. If this quorum is not met, a second meeting should be called within thirty days, and this second meeting is valid if attended by shareholders representing half of the company's capital. If this quorum is not met in the second meeting, a third meeting should be called after thirty days, and this third meeting is valid regardless of the number of attendees. However, decisions in the third meeting are not effective without the approval of the relevant authority
Q67: What is meant by majority decisions?
Decisions are made by a simple majority, meaning that the number of votes in favor of a decision must exceed the number of votes against it. The company's bylaws may specify different types of majorities for different matters.
Q68: What are the procedures to follow if the Chairman of the Board cannot attend the General Assembly?
If the Chairman of the Board cannot attend the General Assembly, their deputy presides over the meeting. If neither the Chairman nor the deputy can attend, the Board must appoint a temporary chairman from among the attending members.
Q69: What are the procedures for postponing the General Assembly?
The General Assembly can be postponed by a decision of the Board of Directors or at the request of shareholders, provided that all shareholders are notified of the postponement and its reasons at least 21 days before the new date
Q70: Can shareholders propose new items to the agenda?
Yes, shareholders can propose new items to the agenda, provided that the proposals are submitted before the General Assembly meeting in a timely manner, as specified in the company's bylaws.
Q71: What documents are required to attend the General Assembly?
Shareholders must present their identification cards and any documents proving their share ownership. Proxies must present an official power of attorney that proves their authorization
Q72: How are shareholder objections to General Assembly decisions handled?
Shareholders can submit objections to General Assembly decisions by filing complaints with the company's management or the relevant authority within a specified period after the decisions are made. The objections are reviewed according to legal regulations.
Q73: Can the General Assembly be held electronically?
Yes, the General Assembly can be held electronically if this is specified in the company's bylaws. Legal procedures regarding the technology used and ensuring correct voting by shareholders must be followed
Q74: What are the penalties for violations during the General Assembly?
Penalties for violations can include financial fines, invalidation of the violations, or restrictions on shareholders' rights, and may extend to legal accountability for Board members.
Q75: What is the grace period for registering shareholder objections to the General Assembly minutes?
Shareholders can register objections to the General Assembly minutes within thirty days from the meeting date. After this period, the minutes are considered approved.
Q76: What role does the auditor play in the General Assembly?
The auditor provides a detailed report on the company's financial condition and has the right to attend the General Assembly, discuss the report with shareholders, and answer their questions.
Q77: What are the responsibilities of Board members regarding General Assembly decisions?
Board members must implement General Assembly decisions in good faith and according to the law and the company's bylaws, and they must inform shareholders of any related actions or changes.
Q78: How is the company's Articles of Association amended?
The company's bylaws specify that an Extraordinary General Assembly must approve any changes to the Articles of Association, and only then may they be made with a specific majority vote. The amendments must be documented and reported to the relevant authorities
Q79: Can shareholders challenge General Assembly decisions?
Yes, shareholders can challenge General Assembly decisions before the competent court if they believe the decisions are contrary to the law or the company's bylaws, or infringe upon their rights as shareholders
Q80: What are the consequences of a court ruling to annul General Assembly decisions
A court ruling of annulment means the decision is void for all shareholders, and the Board must publish the annulment judgment in two daily local newspapers in Arabic
?Q81: When does the right to challenge General Assembly decisions expire
The right to challenge General Assembly decisions expires one year from the date the contested decision was made. Filing a lawsuit does not suspend the decision's implementation unless ordered by the court