Calling a Shareholders Meeting When the Board Refuses

The right to requisition a general meeting

Shareholders do not have to wait passively for directors to convene meetings. The Companies Act 2016 gives members a self-help mechanism when the board is unresponsive, hostile or simply deadlocked.

Section 311 allows one or more members holding at least 10% of the total paid-up capital that carries voting rights to requisition the directors to call a general meeting. The requisition must state the general nature of the business to be dealt with and must be signed by or on behalf of the requisitioning members.

In a private company, members holding at least 5% may make a requisition if more than 12 months have passed since the last meeting called on a member requisition (section 311(4)). This threshold is measured by voting shares, not by headcount. In a company with two shareholders holding 90% and 10% respectively, the minority shareholder meets the threshold alone. In a company with ten equal shareholders, any one of them meets the threshold.

What the directors must do

Once the directors receive a valid requisition, section 312 requires them to call the meeting within 14 days of the requisition. The meeting itself must be held on a date not more than 28 days after the date of the notice convening it.

The directors have limited room to refuse. Under section 311(5), a resolution may properly be moved unless, if passed, it would be ineffective because it conflicts with the law or the constitution, is defamatory, frivolous or vexatious, or would not be in the best interest of the company. Outside those grounds, the right to requisition belongs to the members, not the board.

Calling the meeting yourself under section 313

If the directors fail to call the meeting within the 14-day window, section 313 allows the requisitioning members to convene the meeting themselves. The meeting must be called in the same manner, as nearly as possible, as meetings called by the directors.

This means complying with notice periods, providing the agenda, and holding the meeting at a proper venue. The meeting must be held not more than three months after the directors received the requisition. Under section 313(6) and (7), reasonable expenses the members incur because the directors failed to act are reimbursed by the company, which may then recover those sums from amounts due to the directors who were in default.

Section 313 is a powerful tool, but it must be exercised carefully. Procedural errors can leave the meeting open to challenge, and resolutions passed at a defectively convened meeting may be set aside.

Court-ordered meetings under section 314

Where it is impracticable to call or conduct a meeting in the manner prescribed by the Act or the constitution, any director or any member entitled to vote may apply to the court under section 314 for an order directing that a meeting be held.

The court has wide discretion. It may order the meeting to be called, held and conducted in any manner it thinks fit, and may direct that one member present in person or by proxy is enough to form a meeting. This remedy is particularly useful where deadlock, illness, absence from the jurisdiction, or obstructive conduct makes a conventional meeting impossible.

Where the requisition route is available, it is usually quicker and simpler to use it first.

Notice periods and procedural requirements

For a private company, the minimum notice period for a general meeting is generally 14 days, unless the constitution requires a longer period. A resolution to remove a director under section 206 requires special notice to the company at least 28 days before the meeting.

Notice must be given to every member entitled to receive it, to every director, and to the auditors. The notice must specify the place, date and time of the meeting and, in reasonable detail, the business to be transacted.

Special resolutions require the intention to propose the resolution as a special resolution to be stated in the notice, along with the full text of the resolution. Ordinary resolutions do not require the full text, but the notice must describe the business clearly enough for members to decide whether to attend.

Common pitfalls in family and owner-managed companies

Disputes over shareholders meetings arise frequently in family businesses and owner-managed companies. Several recurring problems are worth noting.

Informal practices

Many private companies operate informally for years, holding meetings around the kitchen table or not at all. When a dispute arises, one faction may suddenly insist on strict compliance with notice and quorum rules. Members who have grown accustomed to informality may find their own conduct used against them.

Defective share registers

A requisition must come from members holding the required percentage. If the share register is incomplete or inaccurate, questions may arise about whether the requisitionists actually hold the shares they claim. Ensure the register is up to date before issuing a requisition.

Ambiguous or incomplete constitutions

Some older companies still operate under constitutions adopted under the Companies Act 1965 that were never updated. Provisions on notice, quorum and voting may be unclear or inconsistent with the 2016 Act. Review the constitution carefully before convening a meeting.

Mixing personal and company disputes

In family companies, personal grievances often spill over into corporate governance. A requisitioned meeting is not the forum to resolve inheritance disputes, marriage breakdowns or sibling rivalries. Keep the agenda focused on legitimate company business.

Failure to follow through

Some requisitions are served in the heat of dispute and then allowed to lapse. If directors do not comply within 14 days, the requisitioning members must act promptly under section 313 or lose momentum. Delay can also prejudice any subsequent court application.

Practical steps

Members considering a requisition should take the following steps:

• Confirm shareholdings by inspecting the register of members.
• Draft the requisition clearly, stating the general nature of the business.
• Serve the requisition on the company at its registered office or in the manner permitted by the constitution.
• Keep a clear record of the date of service.
• If directors do not respond within 14 days, prepare to convene the meeting under section 313.
• Ensure all procedural requirements for notice, quorum and conduct of the meeting are observed.

General information, not legal advice.

Common questions

What percentage of shares do I need to requisition a meeting?

You need at least 10% of the paid-up capital carrying voting rights. This can be held by one member or by several members acting together.

How long do directors have to respond to a requisition?

Directors must call the meeting within 14 days of receiving a valid requisition. The meeting itself must be held within 28 days after the notice.

Can I call the meeting myself if directors ignore my requisition?

Yes. Under section 313, if directors fail to act within 14 days, requisitioning members may convene the meeting themselves and recover reasonable expenses from the company.

When can I apply to court for a meeting order?

Under section 314, you may apply if it is impracticable to call or conduct a meeting in the usual way, such as when there is deadlock or obstructive conduct.

What notice must I give for a general meeting?

For a private company, generally 14 days unless the constitution requires longer. Removing a director under section 206 needs special notice to the company at least 28 days before the meeting.