Investors in the nation’s capital market have kicked against the provision in the Business Facilitation (Miscellaneous Provision) Act, 2023 that allows all companies, including publicly quoted companies, to hold their general meetings electronically, saying that the amendment infringes on the right of shareholders to physically attend the Annual General Meetings (AGMs) in line with SEC 252 (1) of CAMA 2020 as amended.
The shareholders under the aegis of the New Dimension Shareholders Association threatened to take every step necessary (including legal action) to seek relevant amendment of the section of the law to address the observed issues.
Recall that President Muhammadu Buhari, in February 2023, signed the Business Facilitation Act, 2023 into law as part of efforts to promote the ease of doing business in Nigeria and eliminate bottlenecks companies face. Among the amendments was the consequential amendment of section 240(2) of the Principal Act which deletes the word ‘private’, thus empowering public quoted companies to hold their general meetings electronically.
Section 240 of the Companies and Allied Matters Act (CAMA) permits only private companies to virtually hold general meetings. The section reads: “A private company may hold its general meeting electronically provided such meetings are conducted by the articles of the company”.
In a petition to the Securities and Exchange Commission (SEC), the Financial Reporting Council of Nigeria (FRC), the Corporate Affairs Commission (CAC), and the Nigerian Exchange Group titled: “Attendance of Annual General Meetings of Public Companies by the Shareholders, signed by the association’s chairman, Mr. Patrick Ajudua, and the Secretary, Mr. Moses Okorie, among other things, said that virtual meetings would not justifiably serve the utmost interest of investors when considering critical issues under a special resolution that would affect their investment.
They added that shareholders’ inability to vote, physically attend the meeting, and ask relevant questions before passing such resolutions would cast doubt on the credibility of the meeting.
They, therefore, called on the SEC to impress upon the companies to hold their general meetings physically and virtually (hybrid) in line with the CAC’s rule on guidelines for AGM 2023, saying that that it would ensure the protection of the fundamental rights shareholders, protection of minority shareholders, and promotion of good corporate governance among others.
