Checking contract terms

The Shareholders General Meeting is the sovereign body of trading companies, and its powers include such important competences as the approval of the company’s annual accounts and the appointment and removal of its directors.

Regulation of the entitlement to attend a Shareholders General Meeting by the Corporate Enterprises Act

The Corporate Enterprises Act regulates the right of attendance with clearly differentiated nuances, depending on whether we are referring to limited companies or public limited companies.

This differentiation is based on the legislator’s consideration of limited companies as those designed for a small number of shareholders and which are more closed, as opposed to public limited companies, which are a priori designed for companies with a large number of shareholders and which are open. A theoretical distinction which, depending on the articles of association agreed, can become quite blurred.

Shareholders’ right to attend the General Meeting in limited liability companies

In a limited liability company, all shareholders, irrespective of the share capital they hold, have the right to attend the general meeting, and the articles of association may not impose a minimum number of shares.

Shareholders’ right to attend the General Meeting in public limited companies

For public limited companies, however, due to the aforementioned presumption of a more open company with a larger number of shareholders, the articles of association may make attendance conditional on the ownership of a minimum number of shares, although this limit may in no case be higher than one per thousand of the share capital.

In addition, also only for public limited companies, it is possible that the articles of association may require proof of shareholder status to be provided in advance (with a maximum of five days from the date of acquisition).

As far as the company’s directors are concerned, they have not only the right but also the duty to attend general meetings. This duty applies to both public limited companies and private limited companies and is congruent with the broader duty required by law of directors to diligently inform themselves of the company’s progress, which is difficult to fulfil if they do not attend the general meetings.

Finally, it should be remembered that the current Corporate Enterprises Act allows the attendance of “directors, managers, technicians and other persons who have an interest in the smooth running of company affairs” to be authorised by the articles of association; a provision which, moreover, is not very frequent in company practice.

The Law also allows, unless otherwise agreed in the articles of association for the SL, that the chairman of the General Meeting may authorise the presence of the persons he deems appropriate, a power which, however, may be revoked, in each case, by the General Meeting itself.

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