The “Securities”: 15 conditions for the validity of the annual general assemblies

The Securities Commission has defined 15 prerequisite conditions for the holding of annual general assemblies for public joint-stock companies, as defined by the Commercial Companies Law. In an awareness bulletin, the authority obtained a copy of the Emirates Today, that these conditions are:

1 Adherence to the date of the annual general assembly meeting during the four months following the end of the fiscal year, according to the provision of Article (171) of the Commercial Companies Law, provided that the second meeting takes place in the event that the quorum of the legal presence for the first meeting is not completed within the aforementioned period.

2 The authority should be provided with the request to approve the annual general assembly invitation, the 2019 corporate governance report, for companies that are required to disclose the corporate governance report.

3 Disclosure of the audited annual financial statements before obtaining the approval of the authority to publish the invitation of the annual general meeting.

4 For the appointment of the auditor for public joint-stock companies, he must be accredited with the Authority in accordance with the controls set out in the Authority's Board of Directors Resolution No. (25) for the year 2015.

5 When appointing an auditor, it is necessary to observe the provisions of Article (243) of Federal Law No. 2 of 2015 regarding commercial companies, whereby the General Assembly shall appoint one or more auditors for a period of one year renewable, provided that it does not exceed three consecutive years.

6 The company's articles of association clarify the method for calculating the remuneration of the members of the Board of Directors, and these bonuses must not exceed (10%) of the net profit for the ending fiscal year, after deducting all of the depreciation and reserves.

7 The general assembly of the company determines the percentage that must be distributed to the shareholders from the net profits, after deducting the statutory reserve and the optional reserve, and the company's articles of association may specify the distribution of annual, half or quarterly profits. The company must deposit the cash dividends for the registered shareholders on the tenth day, starting from the day following the date of the meeting of the general assembly in which it was decided to distribute those profits, according to the mechanism approved by the Authority, so that the process of paying the cash dividends to the shareholders does not exceed 30 days from the date of the decision to approve those Distributions.

8 Obligation to include the agenda of the annual general assembly, the issues outlined below in accordance with the provisions of Article (177) of the Commercial Companies Law:

- The report of the Board of Directors on the company's activity and its financial position during the year, the report of the auditors and the report of the Internal Sharia Supervision Committee, if the company practices its activities in accordance with the provisions of Islamic Sharia and its approval.

- The company's budget and profit and loss account.

- Election of members of the Board of Directors when necessary.

- Appointing members of the Internal Sharia Supervision Committee, if the company is operating in accordance with the provisions of Islamic Sharia.

- Appointing auditors and determining their fees.

- Board of Directors' proposals regarding the distribution of profits, whether they are cash dividends, or bonus shares. The type and amount of distribution and its ratio to capital must be specified.

- A proposal by the Board of Directors regarding the remuneration and determination of members of the Board of Directors

Discharge the members of the Board of Directors, or dismiss them and file a suit for liability, as appropriate.

- Disclaiming the auditors, or isolating them and filing a liability suit against them, as the case may be.

9 The report of the Board of Directors, the auditor and the annual financial statements that are presented to the general assembly must include details of any transactions that have taken place or will be carried out by the relevant parties, namely: the chairman and members of the board of directors, members of the higher executive management, employees of the company, and the companies to which any of these contribute, including: Not less than 30% of its capital, and the subsidiary, sister or affiliate companies of the company.

10 In the event of concluding deals with related parties, the value of which exceeds 5% of the issued capital, it must be evaluated by an evaluator accredited to the Commission, before presenting it to the General Assembly.

11 The general assembly meeting is not valid unless attended by shareholders who own or represent the agency or have electronic voting by distance, at least 50% of the company’s capital, unless the company's articles of association specify a greater percentage.

12 Taking into consideration what is stipulated in Article (146) of Federal Law No. (2) of 2015 in the matter of commercial companies, the company's articles of association specify the method of voting on the decisions of the general assembly, yet voting must be secret, if it is related to the election of members of the Council Management, isolation or accountability, whereby the decisions of the general assembly are issued by a majority of the shares represented in the meeting, or by any larger majority determined by the articles of association in the decisions taken in ordinary matters.

13 General Assembly decisions issued in accordance with the provisions of this law and the company’s system, are binding on all shareholders, whether they are present at the meeting in which these decisions were issued or absent from it and whether they agree with it or are against it.

14 The members of the Board of Directors may not participate in voting on the decisions of the general assembly to absolve them of their responsibility for their management, or that relate to a special benefit for them, related to conflict of interests, or a dispute between them and the company.

15 The General Assembly shall remove the Chairman of the Board of Directors or any member of the Board or all members of the Board of Directors. In this case, the General Assembly must delegate whom it deems appropriate to chair the General Assembly meeting, take measures to open the door for candidacy and invite the General Assembly to elect new members to the Board of Directors instead of those who They were removed, and those who were removed may not be re-nominated for membership in the Council before three years have passed from the date of the issuance of the dismissal decision, subject to the provisions of Articles (143) and (144) of the Companies Law, and both the Authority and the competent authority are notified to them.

The general assembly has the right to dismiss the chairman or any member of the board or all members.

- General Assembly decisions are binding on all shareholders.

Disclosure of audited financial statements before obtaining the approval of the authority to publish the meeting of the General Assembly.