Annual General Meeting (AGM) of Shareholders. Requirements in Ukraine

This material is based on firm’s experience of legal support of joint stock companies’ general meetings. If you require assistance related to appropriate meeting conduction, contact us to negotiate all the key point.

March is traditionally the month when joint stock companies are getting ready for conduction of annual general meetings. In accordance with Section 2 of Article 32 of the Law of Ukraine “On joint stock companies” they must be held not later than the 30^th of April of the year which is subsequent to the reporting one. But issues related to preparation appear much earlier. And this material is about such issues.

1. In order to hold an annual general meeting it is required to make a decision about its conduction.

Such decision is made by a supervisory board (if a joint stock company does not have a supervisory board its duties related to preparation and conduction of general meeting are performed by executive body). This decision must include date, time, location of general meeting conduction (including number of room, office or hall where the meeting is to be held); list of issues that are to be voted on; time of beginning and end of shareholders’ registration for and procedure of general meeting preparation materials examination by shareholders (in particular location for examination and official responsible for examination procedure). Also the supervisory board must approve the agenda of general meeting and projects of decisions that are included.

2. It is also required to make a list of shareholders that are entitled to participate in general meeting.

In order to do so a supervisory board must not only make a decision about conduction of general meeting but also to decide on the date until which the list of shareholders which are entitled to participate in general meeting is to be made. Such date cannot precede the day when a decision on conduction of general meeting is made and be set earlier than 60 days prior to conduction of general meeting. This decision serves as a ground for a corporate secretary or other authorized person to send a request to depositary to make the list of shareholders as of the date decided by supervisory board. This request should be accompanied by a document which certifies power of a person to give such requests to depositary.

3. Send personal written notifications about conduction of meeting to shareholders.

Such notifications must be filed not later than 30 days prior to the date of general meeting conduction in the manner defined by charter of a joint stock company. They include information provided by Section 3 of Article 35 of the law on joint stock companies (in particular date, time and place of general meeting conduction, date of shareholders’ list preparation, list of issues to be voted on, date of beginning and end of shareholders registration, procedure of general meeting preparation materials examination by shareholders and other). Along with notification the shareholders also receive agenda of general meeting approved by the supervisory board.

4. Publish notification about conduction of a general meeting in one of periodicals of the National Securities and Stock Market Commission (for example daily newspaper “Bulletin. Securities of Ukraine”).

Publication must be performed not later than 30 days prior to the date of joint stock company general meeting conduction. Public Joint Stock Company must additionally file notification about conduction of general meeting and agenda to a stock market that listed its shares and post information on its own website which is provided by section 3 of article 35 of the law on joint stock companies for notifications about conduction of general meeting.

5. Provide shareholders with an opportunity to revise the documents about which they’ll make decisions due to agenda.

6. Consider proposals of shareholders about agenda.

Such proposals can be made by shareholders not later than 20 days prior to the date of general meeting conduction. Proposals about candidates for bodies of the company are made not later than 7 days prior to the date of general meeting. They must prepared be in written form and include last name (naming) of a shareholder that makes a proposal, amount, type and/or class of shares that belong to a candidate who is suggested for a body of a corporation.

The supervisory board can refuse in inclusion of proposals that are not in compliance with these requirements to agenda despite the amount of shares that are owned by the author. But if these requirements are in compliance the supervisory board is obligated to include proposals of shareholder (shareholders) that totally own 5 and more percent of shares. Proposals of shareholders that own less than 5 percent of shares can also be denied based on other grounds.

Reasoned decision about refusal to include a proposal of shareholder to agenda must be sent to the shareholder by supervisory board not later than 3 days after its issuance. At the same time decision about inclusion of shareholder’s proposal to agenda must be made not later than 15 days prior to the date of general meeting conduction and regarding candidates for bodies of a company this term cannot be later than 4 days before conduction of general meeting.

7. Notify about changes in agenda.

Such written notification must be sent to shareholders not later than 10 days prior to conduction of joint stock company general meeting. Public joint stock company must post this information on its own website and notify a stock market that listed its shares about it. At the same time amendments to agenda can be made only in the form of adding new issues and projects of their solution. Amendment of issues or projects that have already been proposed is prohibited.

8. Approve form and text of ballot.

They are approved by the supervisory board not later than 10 days prior to the date of general meeting conduction and regarding candidates for bodies of a company this term cannot be less than 4 days before conduction of a general meeting. Shareholders must have a chance to examine form and content of a ballot at the location which is defined by a notification about conduction of general meeting as place for examination of documents that are required for agenda related decisions.

9. Appoint a registration commission.

Registration commission which has power to register participants of general meeting originally is appointed by supervisory board. Powers of registration commission can be transferred to registrar, custodian or depositary. In this case representative of registrar, custodian or depositary acts as ahead of the commission. Besides a joint stock company must be ready for shareholders that own 10 or more percent of shares and/or the National Securities and Stock Market Commission can decide to appoint their representatives to supervise registration of shareholders, conduction of general meeting, voting and summing up of results. A joint stock company cannot refuse such appointment.

Besides these legal issues it may be required to solve a range of other organizational issues while preparing conduction of general meeting (rental of a premise, equipment, etc.) but these issues exceed the framework of corporate law. Legal preparations of joint stock company general meeting will only require precise preparation and implementation of the abovementioned actions.