Q&As

What are the legal consequences for the directors of a private limited company for failing to hold an annual general meeting where one is required under the articles?

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Published on LexisPSL on 13/01/2015

The following Corporate Q&A provides comprehensive and up to date legal information covering:

  • What are the legal consequences for the directors of a private limited company for failing to hold an annual general meeting where one is required under the articles?
  • Has there been a breach?
  • The duty to act in accordance with the company’s constitution and properly exercise powers
  • The duty to exercise reasonable, care, skill and diligence
  • What are the legal consequences of being in breach of one or more directors’ duties?

Unlike public companies, private limited companies are not required by the Companies Act 2006 (CA 2006) to hold annual general meetings (AGMs). However, private limited companies may include provisions in their articles of association requiring AGMs to be held.

Where a private company’s articles contain provisions that require the directors to call an AGM and they fail to do so, they may be in breach of some of their statutory duties set out in CA 2006 (in particular, the duty to act in accordance with the company’s constitution for a proper purpose).

In order to determine whether there has been a breach of these duties, careful analysis is required of the obligation to call an AGM versus the approach of the courts in determining if there has been a breach of a particular duty.

Has there been a breach?

In considering whether failure to call an AGM would result in any legal consequences for the directors, the main directors' duties that were developed over time by the courts and codified in CA 2006 need to be considered in conjunction with the exact wording of any obligation to call an AGM set out in the company’s articles of association.

In considering each of these duties it may be useful to refer to Practice Note: Directors' duties—directors' conduct: CA 2006, ss 171–176, which summarises the directors’ statutory duties set out

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