The Board of Directors of a public joint stock company shall , legally speaking and according to the terms of the Commercial Companies Law in Bahrain , invite all shareholders of the company to attend the annual general assembly .
Every shareholder , holding any amount of shares in the company has the legitimate right to be invited to attend the annual assembly and or other general assemblies of the company . In fact , the presence of all shareholders would ultimately add ammunition to the deliberations taking place during the session .
All shareholders in the company should prepare themselves and study the agenda for the meeting carefully , and they should attend in person , because they are the legal owners of the company . Part of the jointly-owned stake belongs to each shareholder , though the size of the stakes will vary depending on the number of shares held .
A question arises here , what happens if a shareholder or group of shareholders is unable to attend the scheduled meeting for any reason whatsoever ?
This is a very crucial legal issue because the absence of considerable number of the shareholders could lead to postponement of the meeting for lack of quorum .
We have to admit that , in our region , absenteeism of shareholders during such assemblies or meetings is very common and occurs in many instances . This passive attitude is not acceptable nor recommended because it could destroy the company and could lead to undesired results .
There could be various reasons behind the continuous absence of the shareholders .
It could be due to the fact that some shareholders join the company purely for show-up and to enhance their social status . The Commercial Companies Law requires that at least some or certain percentage of the shareholders shall attend and be present during the meeting otherwise the meeting lacks the required legal quorum and ultimately lacks the legal jurisdiction and cannot take place .
To overcome this bunker , the law gives the shareholders the right of proxy . The shareholders can issue a proxy in case they are not able to attend the meeting . By this process , a shareholder can appoint an agent to attend and act on his behalf during the meeting .
However , such an agent cannot be a Board Director ( or member ) and he shall not , by virtue of this agency , own more than five per cent of the capital of the company ( at the time of appointment of the agents shares plus the shareholders share shall not exceed five per cent of the capital of the company ) .
The rationale behind this is not to allow members of the Board of Directors or certain shareholders to have majority voting shares that would allow them to control the meeting and the decisions to serve their personal or commercial interests.
It is , we could say , an attempt from the law to differentiate between the personal interests of the shareholders and the interests of the company . According to the law , the voting right of the shareholder depends on the number of shares he owns . Each share has only one vote and the more shares you own , the more votes you hold .
I think this is very fair for all shareholders in the company especially those who own majority equity shareholding because they should have an overwhelming right to control the company and lead the way .
A case in point , as a good example , is the giant American Microsoft company where Bill Gates plays a dominant role in the company by virtue of his majority equity shareholding . There are various many other local or international examples .
Going back to the proxy right , the Commercial Companies Law provides that a shareholder who lacks the legal capacity to exercise his legal rights due to non-attainment of the minimum age as provided in The Commercial Transactions Law can be represented by a guardian . In some jurisdictions the age of majority is ( 21 or 18 years ) . Also , incapacity could be due to illness ( mental disability or disorder ) , here also the shareholder can be represented by his guardian or legal representative .
It goes without saying that , the law permits this so as to protect the interests of the incapacitated shareholders or other absent shareholders due to legal and legitimate cause .
Normally , as a matter of procedure , qualified officials from the Ministry of Economy and Commerce and other competent authorities ( if any ) , shall be present during the scheduled assemblies or meetings of the shareholders to verify the proxy documents so as to make sure that they are legally acceptable and in order .
Dr . AbdelGadir Warsama Ghalib
Founder & Principal Legal Counsel
Dr.AbdelGadir Warsama Consultancy
E-mail : awarsama@warsamalc.com
