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Shareholders & General Assembly Guidelines

Purpose

  • The following discusses the Shareholders & the General Assembly Guidelines.

 

Shareholders’ General Rights

All the shareholders’ rights related to the shares should be instilled, and the following rights in particular:

  • The right to receive a dividend from the dividends that are approved for distribution.
  • The right to receive a share of the assets of the Company in the event of liquidation.
  • The right to attend and interact in the shareholders assembly meetings and the right to vote on its resolutions.
  • The right for any actions towards their shares.
  • The right to monitor the Board of Directors’ works and resolutions as well as the right to raise any responsibility claims against any of the members of the Board of Directors.
  • The right to raise queries and receive information regarding the Company’s operations without causing harm to the Company’s interest and should not form a conflict with CMA laws and regulations.
  • Any information which enables shareholders in properly exercise their rights shall be made accessible and such information shall be complete and precise. The information must be provided and updated to them on frequent bases and within the prescribed time as per the Company’s Articles of Association. Inconsistency shall not be exercised with respect to shareholders in relation to providing information.

 

Facilitating Shareholders’ Rights and making the information available for them

  • The Company’s Articles of Association and its bylaws as well as its internal policies and procedures should incorporate and ensure that the shareholders exercise their legal right.
  • The Company should make available all information which enables the shareholders to perfectly exercise their rights. This information should be sufficient and accurate and should be updated regularly and presented in a regular manner to the shareholders plus the Company should implement an effective method to communicate with its shareholders and there should be no preference between one shareholders or another in giving this information.

 

Shareholders’ Rights Relating to General Assembly Meetings

  • The Regular General Assembly shall be convened at least once a year within the six months following the end of the Company’s financial year.
  • Other meetings of the General Assembly shall be convened whenever the need arises as shall be determined by the Board of Directors, or upon the request of the independent auditor or shareholders representing at least 5 % of the Company’s capital.
  • The notices of the General Assembly Meeting shall be published in the Exchange & the Company’s official internet sites, the Official Gazette and in a daily newspaper distributed in the locality of the head office of the Company, at least twenty (20) days prior to the date agreed for the meeting. The notice shall contain the agenda for the meeting. Modern high tech means such as emails and fax should be used in communication with shareholders.
  • Shareholders shall exercise their voting rights at the General Assembly and shall be informed about the rules governing the meetings and voting procedures through the above General Assembly Meeting notices.
  • The Board shall encourage and facilitate the widest possible participation of the shareholders at the General Assembly Meetings by appointing the most appropriate time and place for the meeting.
  • The agenda of each meeting should be prepared by the Board taking into consideration the topics that the shareholders would like to discuss in the meeting. Shareholders with shares representing 5% or more have the right to add one or more agenda items to be discussed in the meeting.
  • Shareholders have the right to discuss any agenda item in the meeting as well as directing questions to the Board and the external auditor during the meeting. The Board along with the external auditor should reply with answers to those questions unless the answers would impair the Company’s interest.
  • All matters to be discussed in the meeting should be supported with sufficient information to enable the shareholders to take the correct resolution related to the specific item discussed.
  • Minutes of meetings should be made available for the shareholders and a copy should be sent to the Capital Market Authority within a maximum of 10 days after the date of the meeting.
  • Exchange should be updated immediately with the results of the General Assembly Meeting.

 

 Regular General Assembly Guidelines

  • A shareholder may, in writing, give proxy to another shareholder other than a Director to attend the General Assembly Meeting on his behalf.
  • The Chairman of the Board will preside at all meetings of the General Assembly. In absence of the Chairman, the Board will mutually elect the Chairman to preside that specific meeting.
  • The General Assembly will only discuss items on the meeting agenda.
  • It is expected that all the Board of Directors will attend the annual Shareholders’ General Assembly.
  • The General Assembly Meetings provide an opportunity for individual shareholders to meet and communicate with the Board to develop a better understanding of the Company’s operations and its prospects.
  • Minutes shall be kept for every General Assembly Meeting showing the names of shareholders present or represented, the number of shares held by each of them, whether personally attending or by proxy, the number of votes allotted, the resolutions adopted, the number of consenting and dissenting votes, and a comprehensive summary of the debate conducted at the meeting.
  • Following every General Assembly Meeting, the minutes shall be entered into a special register, which shall be signed by the Chairman and Board Secretary of the meeting.
  • The Regular General Assembly Meeting will be valid only if attended by shareholders representing at least one half of the Company’s capital. If this quorum is not achieved at the first meeting, a notice shall be sent for a second meeting within 30 days of the previous meeting. The second meeting shall be considered valid regardless of the number of shares represented at the meeting.
  • The Regular General Assembly Meeting shall discuss and address all matters related to the Company, except for matters falling within the jurisdiction of the Extraordinary General Assembly Meeting. The following are the typical duties and responsibilities of the Regular General Assembly:
    • Election and dismissal of Directors.
    • Review the Board’s report on the activities and performance of the Company.
    • Review the Independent Auditor’s report.
    • Approve the Company’s annual financial statements.
    • Approve distribution of profits to shareholders (dividend).
    • Approve the appointment of the Independent Auditor and its compensation.
    • Approve the equity compensation of the Directors and the Executive officers.
  • The resolutions of the Regular General Assembly Meeting shall be adopted by absolute majority vote of the shares represented at the meeting.

 

Extraordinary General Assembly

  • The Extraordinary General Assembly shall be convened whenever the need arises and at such times as shall be determined by the Board of Directors.
  • The following are the typical duties and responsibilities of the Extraordinary General Assembly:
    • Amendments to the statues or Articles of Incorporation and other similar governing documents of the Company.
    • Extraordinary transactions, including sale of the Company and mergers and acquisitions.
    • Amendments to the capital structure of the Company.
    • Any corporate changes that dilute the equity or erode the interests of shareholders.
  • The Extraordinary General Assembly Meeting may also adopt resolutions on matters falling primarily within the jurisdiction of the Regular General Assembly Meeting.
  • The Extraordinary General Assembly Meeting will be valid only if attended by shareholders representing at least one half of the Company’s capital. If this quorum is not achieved at the first meeting, a notice shall be sent for a second meeting within 30 days of the previous meeting. The second meeting shall be valid if attended by a number of shareholders representing at least one quarter of the Company’s capital.
  • The resolutions of the Extraordinary General Assembly Meeting shall be adopted by a two-third majority of vote of the shares represented at the meeting. But if a resolution pertains to an increase or a decrease in capital, or to extension to the term of the Company, or to dissolution of the Company prior to expiry of the term specified in its bylaws or to merge the Company with another company or firm, it shall be valid only if adopted by a three-fourth majority vote of the shares represented at the meeting.

 

Shareholders Rights & Voting Powers

  • It is the right of every shareholder to participate and vote in the General Assembly Meetings and the Company should avoid any procedure that would hinder this voting right. On the contrary, the Company should facilitate the shareholders’ rights to vote.
  • The Accumulative voting technique should be utilized when voting to elect members of the Board.
  • A shareholder may, in writing, give proxy to another shareholder who is neither a Board member nor a company employee to attend the General Assembly Meeting on his behalf.
  • Investors who are judicial persons and who act on behalf of others - e.g. investment funds- shall disclose in their annual reports their voting policies, actual voting, and ways of dealing with any material conflict of interests that may affect the practice of the fundamental rights in relation to their investments.

 

Shareholders Dividend Rights

  • The Board should establish a clear policy regarding the distribution of dividend that balances both the Company and the shareholders interests. This policy should be clearly communicated to shareholders in the General Assembly Meetings and should be noted in the Board of Directors’ report.
  • The General Assembly should declare the proposed dividend and the payment date. The right to receive a dividend, whether in cash or bonus shares, is to shareholders registered in the Securities Depository Center at the end of the trading on the day of the General Assembly Meeting.