SCHOOL OF BUSINESS AND MANAGEMENT SCIENCES

DEPARTMENTOF ELECTRONIC COMMERCE

NAME DOBA SAMANTHA R

REG NUMBER H170423F

COURSECODE BEC214

COURSE COOPERATE LAW

LECTURER MR ZVIKARAMBA
Question

With the aid of case law examples analyze the statutory meetings of a company at law in
Zimbabwe.

Members are often scattered all over the country and it is difficult for them to be involved in the
daily management of the company business. Collective decisions, however, have to be made at
some point. This can be done by calling a general meeting of the members.

The general meeting is the ultimate organ of corporate control. There are three kinds of meetings
namely:

1. Statutory meetings of a public company.

2. The annual general meeting which has to be called in each year.

3. The extraordinary meeting which may be convened at any time during the year.

There may be a fourth meeting if a company has more than one class of shares; a class meeting.
Every member of that class may attend to speak and vote. The resolutions there bind only
members of the class concerned. Class meetings also consider alterations in the rights of the class
under provisions to that effect in the memorandum or articles of association and comprises of
arrangements affecting the class. In the absence of express provision, such meetings are
governed by the provisions of the Companies Act concerning general meetings.

(a) Statutory meetings – s.124

In the case of a private company, every company shall, within a period of not less than one
month or more than three months from the date at which it is entitled to commence business,
hold a general meeting of its members which shall be called “the statutory meeting” according to
the companies act. The object of the statutory meeting, which is usually the first general meeting
in the case of a new company, is to afford members of a new company an opportunity of
discussing its affairs as soon as possible. The business of the meeting is to discuss any matter
relating to the company’s formation or arising out of the ‘Statutory Report’. This report is
forwarded to every member by the Director at least 14 clear days before the meeting, s.124 (2).
This report must be certified by at least two directors and by the auditors, if any, of the company,
s.124 (4). A copy of this report is also filed with the Registrar of Companies, s.124 (5). The
report must give the details required or specified in s.124 (3) (a–e). At the meeting, the directors
must produce a list showing the names, descriptions and addresses of the members of the
company and the number of shares held by them respectively. This must be kept open for any
members during the continuance of the meeting, s.124 (6). Members are free to discuss any
matters relating to the formation of the company or arising out of the Statutory Report, s.124 (7).

Only business left unfinished at one meeting can be dealt with at an adjourned meeting, but in
terms of s.124 (8) the members can introduce new business at the adjourned meeting. Failure to
hold the statutory meeting or file the statutory reports are grounds for winding up of the company
by the Court, s.206 (6). Instead of making a winding up order, the court may direct that the report
shall be delivered or the meeting held and order the costs to be paid by any persons who, in the
opinion of the court, were responsible for the default – s.210(3)(a).

Case REBECCA SIZIBA V BLAMSOLVE INVESTMENTS. In this case ,SIZIBA applied for
company winding up as since the company failed to hold statutory meeting. This matter came on
a certificate of urgency with the Applicant seeking a provisional liquidation order of the first
Respondent setting out an array of reasons why this should be done. The company has failed to
lodge a statutory report or hold a statutory meeting for more than 6 years and there are no annual
returns lodged either. It should be recalled that first Respondent is a private company and as
such this requirement does not apply to it. See section 124 of Companies Act, [Chapter 24:03]
the company has no bank account and no deposits are being made into a bank, very little gold is
being deposited at the Reserve Bank of Zimbabwe suggesting that the company is dealing
illegally in gold that is being mined, the company is not paying taxes and other statutory
deductions and has not been paying its accounts, no dividend has been declared for over 6 years,
attempts to resolve the matter amicably have failed and there is a high risk that and it was then
held that there were breech of law and the company be wounded up.

If a company failed to contact a statutory meeting within 6 month of incorporation, aggrieved

shareholders can apply for winding up.

In this meeting the members are to discuss a report by the directors , known as the Statutory
Report, which contains particulars relating to the formation of the company ,that is ,he directors
of a company need to make a statutory report and every member must be given a copy of the
report at least 21 days before the date of the meeting and a copy is also sent to the registrar for
registration ,that is, a statutory report has to be circulated to all members involved . Delay in
sending the statutory report can; however, be condoned by a unanimous vote of the members
present at the meeting.

There are several contents that should be present in the statutory report and these are; the total
number of shares allotted, distinguishing those allotted as fully paid up otherwise than in cash,
and the consideration for allotment, the total amount of cash received by the company in respect
of all the shares allotted, an abstract of the receipts and payments of the company up to a date
within 7 days of the date of the report and the balance in hand, Company’s receipts from capital
issues and other sources and an account or estimate of the preliminary expenses. Commission or
discount paid or to be paid on the issue or sale of shares or debentures must be separately shown,
the names, addresses and occupations of directors, auditors, manager and secretary and changes
occurred in such names since the date of the company’s incorporation the particulars of any
contract which, or the modifications of which, is to be submitted to the meeting for its approval
together with the modifications, he extent to which any underwriting contract has not been
carried out and the reasons thereof, details of arrears of calls due from every director and
manager and details of any commission or brokerage paid or payable to any director, or manager
in connection with the issue or sale of shares or debentures.

Case HUNG SENG CO LTD VS YIN&ORS (1982) where the meeting was not properly
handled and it was held that it was void.

(b) Annual general meeting (AGM) s.102/Table A, Article 47

The AGM shall be held at such time and place as the directors decide. Section 125 requires every
company to hold an AGM within 18 months of incorporation except in the year of its
incorporation. The businesses which may be transacted at the AGM may be ‘ordinary’ or
‘special’. In terms of s.132(6) there is no requirement or limitation placed on the type of business
which may be conducted at an AGM. Section 175(7) stipulates the penalties imposed on a
company for failure to hold an AGM. Business that is transacted at the AGM includes the
appointment of directors, appointment of auditors, and declaration of dividends, remuneration of
directors and auditors and consideration of the company’s accounts.

CASE LEON SUN WING VS WAH HUP ENGINEERING WORKS SDN BHD (1984).
(b) Section 167:
If default is made in holding an Annual General Meeting in accordance with Sec. 166, the
Regional Director of the Company Law Board may, on the application of any member of the
company, call or direct the calling of a general meeting. He may also give directions regarding
the calling, holding and conducting the meeting. Such a meeting shall be deemed to be an
Annual General Meeting of the company

(c) Section 168:

If the provisions of Sections 166 and 167 are not complied with, the company and every officer
of the company be fined.

(d) Section 171:

A general meeting may be called by giving not less than 21days’ notice in writing. The Annual
General Meeting may be called with a shorter no tice if it is agreed to by all the members entitled
to vote in the meeting. The Court has no power to direct the calling of the Annual General
Meeting.

If for any reason an annual general meeting of a company is not or cannot be held as specified in
this section or any matter required in terms of this Act to be dealt with and disposed of at such
meeting is not dealt with thereat, the Registrar may, upon payment of the prescribed fee and
upon application being made to him by the company or any member or its or his legal
representative call or direct the calling of a general meeting of the company which shall be
deemed to be an annual general meeting; and give such ancillary or con sequential directions as
he may think expedient, including directions modifying or supplementing in relation to the
calling, holding and conduct of the meeting. the operation of the company’s articles, and
directions providing for one member or the legal representative of a member or any specified
number of members present in person or by proxy to be deemed to constitute a meeting; and any
meeting called, held or conducted in accordance with any such call or direction shall for all
purposes be deemed to be an annual general meeting of the company duly called, held and
conducted.

(c) Extraordinary general meeting (EGM)

These are general meetings of a company which are not AGMs – Article 48 Table A. The
purpose of these meetings is to provide members or directors an opportunity to deal with urgent
matters which must be attended to in between AGMs – Article49. Some of the more urgent
issues that may be discussed at an EGM might very well include such matters as changes to the
memorandum and articles of association, removal of errant and non-performing directors before
the expiry of their contracts, results of merger and de-merger talks, etc. In many jurisdictions,
including Zimbabwe, corporate governance has in recent years firmly entrenched itself to the
modern business agenda. Though appearing in somewhat different contexts and in different
forms, it has successfully retained similar core issues the need to achieve and maintain
institutional progress and stability together with its attendant results. Corporate governance refers
to the processes and structures by which a business and affairs of an entity are directed and
managed in order to enhance shareholder value through enhancing performance and
accountability whilst taking into account the interests of other stakeholders. Good corporate
governance accordingly embodies transparency, performance, ethics and accountability. The
idea, in part, stems from the principle of separate personality – Salomon v Salomon (1897). It is
recognized that a corporation is an abstraction, has no mind of its own and is directed by
someone, who assumes the status of an alter ego of its personality. It is when one considers the
role of these human agents that the concept becomes critical in the proper administration and
management of business entities and institutions. Corporate governance encompasses a set of
relations between a company’s management, its board, shareholders and other stakeholders.
Corporate governance provides structures through which objectives are set and accomplished. It
incentives and monitors how a corporation uses resources effectively.

References

Companies act chapter 23:04 pp40-60