No later than March 31 of the year following the reporting year, companies that are established in the form of limited liability companies, additional liability companies hold an annual general meeting of owners. This is a mandatory meeting, the date of its holding is defined in the company’s Articles of Association. Prior to the annual general meeting, preparations must be made to take into account the interests of the owners and not violate the company’s charter and legal requirements. Such violations usually lead to the cancellation of the decision of the general meeting. To understand the procedure for preparing for the annual general meeting of owners, you can consult an experienced corporate law lawyer.
Why it is important to hold an annual general meeting of participants
Holding an annual meeting plays an important role in evaluating the company’s performance and determining its future prospects. In particular, based on the results of studying the information of the company’s director on profits and losses for previous years (usually for 3 years), it will determine whether there are grounds for liquidation of the company or for reducing the authorized capital.
For example, a company should reduce its share capital if, at the end of the second and each subsequent financial year, its size is less than net assets (while the new size should not exceed the value of net assets). This must be done within 6 months after the end of the relevant financial year.
Limited liability companies (LLC) and additional liability companies (ALC) must be liquidated by the decision of the participants if the value of their net assets during the reporting period reaches zero or becomes negative.
Why it is important to prepare for the annual general meeting of participants
Preparation for the annual general meeting of participants of a limited liability company (LLC) and an additional liability company (ALC) is important for several reasons.
Chiefly, this allows the owners of the company to be informed about the current state of the company, its financial results, strategic plans and other important aspects of its activities. This allows the owners to discuss and make decisions on key issues that may affect the future of the company.
Secondly, preparation for the annual general meeting allows the company’s management to prepare the necessary reports in a timely manner, provide up-to-date data and answer questions from participants. This contributes to transparency and openness in the management of the company.
In the third place, preparation helps to avoid unpleasant surprises or misunderstandings that may arise if participants are not sufficiently informed about the current state of the company.
What should the residents of the Hi-Tech Park pay attention to before the general annual meeting of participants
Residents of the Hi-Tech Park need to conduct an audit of accounting statements and obtain an auditor’s opinion.
What should all companies pay attention to before the annual general meeting
- Firstly, to ensure the annual audit of the results of financial and economic activities for the reporting year carried out by the audit commission (auditor) of the company, and to obtain the opinion of the audit commission (auditor).
- Submit an opinion for consideration by the annual meeting when approving the annual report, annual financial statements (accounting for income and expenses) and distribution of profits and losses of the company.
- The Director of the company prepares information on the company’s activities (director’s report) for the reporting period and submits it to interested parties no later than 20 days before the annual meeting. The director’s report must contain data on the value of the company’s net assets and their changes over the past 3 years, including the current one (or each completed year if the company has been operating for less than 3 years). Providing such information allows the company’s participants to respond in a timely manner in the event of financial indicators indicating the need to reduce the authorized capital or liquidate the company.
What to pay attention to in the decision to hold the annual general meeting
1. To the body that made the decision. The decision to hold the annual general meeting of the members of the LLC (ALC) is made by the executive body or the board of Directors. The company’s charter contains the name of the body that makes such a decision.
When the body that decides to hold the annual general meeting of participants in accordance with the charter has not made such a decision, the meeting can be held on the initiative of:
- The company’s management body.
- The Audit Commission (auditor) of the company.
- A participant or participants who have at least 10% of the votes of all participants.
2. On the content of the decision to hold the annual general meeting of participants.
The decision to hold the annual general meeting of participants should include:
- The date, time, place, and address where the meeting will take place.
- The agenda. Basically, this is a list of issues that will be considered at the meeting and the texts of draft resolutions of the general meeting on each item on the agenda. Consequently, at this meeting, annual reports and financial documentation (accounting statements) are approved, including data on income and expenses, and a decision is made on the distribution of the company’s profits or losses.
- The form in which the meeting is held. In other words, the meeting can be held in person, in absentia, in a mixed form, remotely. The company’s articles of association may specify in what form the annual general meeting of participants is held.
3. To make a decision on holding a general meeting of participants.
The decision can be made in the form of:
- The minutes, when the decision to hold the annual general meeting of participants was made by the board of directors or a collegial executive body (management board, directorate).
- An order, when the decision was made by the director as the sole executive body.
We recommend making a list of persons who can participate in the annual general meeting of LLC participants (ALC).
What to pay attention to in the notice of the annual general meeting
The persons who have the right to participate in the general meeting are notified at least 30 days in advance about when the general meeting is held. Another term may be prescribed in the company’s articles of association. The peculiarity is that if the issue of electing a member of the board of directors is on the agenda, potential participants must be notified at least 50 days in advance, unless another deadline is specified in the charter.
The procedure for notification is prescribed in the charter.
You need to pay attention to the content of the notification. It must contain mandatory information:
- The name and location of the company.
- Date, time, and address of the annual general meeting.
- The agenda.
- The body or official who initiates the convocation of the meeting.
- In what order do the persons who have the right to participate in the meeting get acquainted with the information to prepare for the meeting. Information about the company’s work must be available to participants at least 20 days before and during the meeting.
- How to register to participate in the meeting.
How we can be useful in preparing for the annual General Meeting of LLC participants (ALC)
Our employees are experienced specialists in the field of corporate law. We can:
- Advise you on the procedure for preparing and holding the general annual meeting of participants.
- Prepare a package of documents for the annual general meeting of participants.
- Organize an audit before the annual general meeting.
- Formulate the issues on the agenda and determine the composition of the participants of the general meeting in difficult cases.
Contact us
If you have any questions related to the preparation and holding of the annual general meeting of the participants of LLC (ALC), we will be glad to help you! Our long-term experience in the field of corporate law will help you in resolving any disputes.
Phone and e-mail communication options are available for your convenience:
- +375293664477 (WhatsApp/Telegram/Viber);
- info@ambylegal.by.
