Chairman role at AGM

[James1957]

I am a Director of a small limited company.

At last years AGM the Chair spoke and encouraged shareholders to vote in a particular way for a resolution and also spoke in favour of the current Directors seeking re-election. Arguments based on Board continuity etc.

Meeting finished and that was that.

9 months down the line we recieve communication from one shareholder (who is not involved) saying that it is wrong that the chair encouraged shareholders to vote for this Director and that the Chair must remain impartial at all times. He demands an apology from the company to all shareholders and an assurance that it will not happen again.

I say that if this was a Quango maybe the Chair should be impartial, but in a Ltd company the Chair (also a shareholder in this case) is perfectly entitled to state his opinion and that of his board.

I can't find any legal statute either way.

What do others think?

 

[Zeno]

I must admit it has been a while since I have dealt with a trading company that actually holds on AGM and that actually re-appoints directors annually.

Basically, yes the chairman is supposed to remain inpartial. It was not his place to make recomendations on how others should vote.

I do not know why the other shareholder has his knickers in a twist though and no idea what he feels an apology will accomplish.

 

[Free Lance]

I'm not sure I agree that the chairman must to remain impartial.

He has certain duties which are owed to the meeting as a whole and which should stand ahead of his own interests. The chairman's role is to ensure the effectiveness of the meeting process - counting proxy votes, allowing attendees to be heard, ensuring votes are taken on a poll rather than on a show of hands if requested, etc; generally facilitating communication between the board and its shareholders.

To the extent that the chairman abused his duties to the meeting to further his own ends (not counting proxy votes against the resolution he favours is a good example) then yes, he was naughty. Although if it makes no difference to the outcome of the meeting then the complaining shareholder can shout all he likes - it won't change the effect.

A different issue is if the Chairman asked the meeting to vote in a particular way but did not disclose fully (to the board) that he, or someone connected with him, was interested in the outcome of the vote. If that was so then we are in the realms of a breach of director's duty - which is then up to the board to decide whether to pursue against the chairman and the shareholders (other than the chairman and those connected with him s.239 CA 2006) to relieve him of that liability if they so choose.

The chairman would also be in breach of his duty if he knew that making the recommendation he made was not in the best interests of the company (new test now under the CA2006 - but it's basically the same).

Unless it is a case of breach of directors duty then I do not believe that the chairman need do anything and certainly should not apologise. By analogy, if that were so then the chairman of a listed PLC being asked to recommend a takeover offer could never recommend the offer to the company's shareholders. In 99% of takeovers the board as a whole will recommend the takeover and the board members will even sign irrevocable undertakings to vote their shares in a certain way.

PM me if you would like a more complete analysis

 

[yorkshirejames]

I must admit it has been a while since I have dealt with a trading company that actually holds on AGM and that actually re-appoints directors annually.

Basically, yes the chairman is supposed to remain inpartial. It was not his place to make recomendations on how others should vote.

I do not know why the other shareholder has his knickers in a twist though and no idea what he feels an apology will accomplish.

No AGM? Missing out on an afternoon of fun!

 

[Zeno]

No AGM? Missing out on an afternoon of fun!

All the AGMs I go to these days are for charities or companies limited by guarantee.

No fun whatsoever although the lunch is usually not bad.

 

[yorkshirejames]

All the AGMs I go to these days are for charities or companies limited by guarantee.

No fun whatsoever although the lunch is usually not bad.

My favourite one is a guarantee company somewhere in the midlands. Their record was four hours once - it never fails to put a smile on my face. Last year there was a vendetta against two chaps who are directors - the vendetta being caused by a few old codgers who were firmly put in their place by yours truly.

 

[Alison Jones]

The longest AGM I have been to is when a social group I am a member of used to have 2 days AGM - Saturday and Sunday. It is now thankfully just on a Saturday 10am - 6pm (foolishly for last 2 years I was on committee so had to attend a pre meeting from 8.30am).

I am not sure if it is right book for companies, but their is a book Citrine which has information on committees and chairman.

I know that the social group I am a member of the chairman cannot influence any decision, and has to go with the status quo and does not get a vote.

Alison

 

[Zeno]

The worst one I have is as auditor for a wee bowling club.

Every year, I ask "any questions?". Every year the same hand goes up, right at the front telling me the accounts are wrong because he is responsible for the pen sales and the figures shown do not agree to his (with him being right because he worked at something or other Ltd for 50 years and you couldn't do that job without being good at mental arthimetic. Which they don't teach anymore. Terrible. What is education coming to? etc etc). Every year I explain the accounts are prepared on the accrual basis, his figures are on cash. Every year the rest fall asleep while I explain in great detail the concept of accrual accounting. Every bloody year he must forget because as sure as there is a hole in my arse, he asks the same question again next year!

 

[yorkshirejames]

The worst one I have is as auditor for a wee bowling club.

Every year, I ask "any questions?". Every year the same hand goes up, right at the front telling me the accounts are wrong because he is responsible for the pen sales and the figures shown do not agree to his (with him being right because he worked at something or other Ltd for 50 years and you couldn't do that job without being good at mental arthimetic. Which they don't teach anymore. Terrible. What is education coming to? etc etc). Every year I explain the accounts are prepared on the accrual basis, his figures are on cash. Every year the rest fall asleep while I explain in great detail the concept of accrual accounting. Every bloody year he must forget because as sure as there is a hole in my arse, he asks the same question again next year!

Film the next one! This sounds like a hoot.

 

[Zeno]

Film the next one! This sounds like a hoot.

It's really not. It's actually a problem when I think that half the people attending probably leave with the impression that the accounts are incorrect and that I am trying to "blind then with science" to cover it up.