International & Iran Regulation

Internal & International >> Internal >>  ESTABLISHING A JOINT STOCK COMPANY IN IRAN >> Part 5

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Part 5

Part 6

Annex A

Annex B  

Shareholders Meetings

5.1 Types

Shareholders meetings are called general meeting and the law provides for three types , the first is the statutory or founders meeting which is mandatory only for the public company .The second is the ordinary (annual) meeting which must be held once a year and the third is the extraordinary meeting involving the shareholders. One is a “special meeting” which must be called whenever the rights of holders of preferred shares are to be altered, to enable these shareholders to vote on the intended alteration. The other is called an “extraordinary session of the ordinary  general meeting” and may be called by the board of directors, inspectors, or holders of 20 percent of the company’s shares whenever action is required on a matter within the competence of the ordinary meeting  at times other than when the ordinary meeting is scheduled  to be held.

5.2 Competence of Ordinary Meeting

The ordinary meeting is competent to deal with all of the affairs of the company except those which are expressly within the competence of the statutory and extraordinary meetings,It is expressly required to take action on the following matters:

(1)  Review and approval of the balance sheet and profit and loss account and other financial reports.

(2)  Review and approval of the directors annual report.

(3)  Review and approval of the inspectors annual report.

(4) Election of directors (if their term has expired)

(5) Election of inspector(s) and alternate inspector(s)

(6)  Designation of general circulation newspaper in which the company’s  legal notices will appear.

5.3 Competence of Extraordinary Meeting

The extraordinary meeting is competent to deal with any changes in the Articles of Association or the share capital and dissolution of the company.

5.4 Directorate

The law provides for management of general meetings by a directorate composed of chairman, a secretary, and two observers. Unless the Articles of Association provides otherwise, the chairman will be the chairman of the board of directors. The secretary need not be a shareholder but the observers must be.

5.5 Notice

Written notice for general meeting must be given to the shareholders not less than 10 days and not more than forty days before data of the meeting and such notice must be published in the general circulation newspaper designated for the company’s legal notices. The notice must state the agenda and the date, hour, and place of the meeting. Waiver of these requirements is authorized whenever all of the shareholders attend the meeting.

5.6 Quorum

The quorum requirement for both the ordinary and extraordinary meetings is more than 50 percent of the shares entitled to vote. If an ordinary meeting fails for lack of a quorum upon the first call, the quorum requirement is reduced upon the second call to any number of shareholders entitled to vote. If an extraordinary meeting fails for lack of a quorum upon the first call, the quorum requirement is reduced upon the second call to more than one- third (1/3) of the shareholders entitled to vote.

5.7 Voting

Decisions at ordinary meetings require favorable votes of 50 percent plus one of the shares present, except in the case of the election of directors for which cumulative voting is mandatory. Decisions at extraordinary meetings require favorable votes of two- third (2/3) of the shares present.

5.8 Proxies

Shareholder proxies are expressly provided for in the law. Written evidence of the proxy power must be submitted to the meeting.

5.9 Admittance Card

Shareholders may be prevented from attending a general meeting unless they obtain from the company in advance an admittance card which is to be issued upon presentation of share certificates.

5.10. Attendance List

The law calls for preparation of an attendance list for all general meetings setting forth the full identity, domicile, number of shares, and number of votes of each shareholder entitled to attend the meeting. The law also requires that this list be signed by each shareholder (or proxy) who attends the meeting.

5.11. Minutes

Written minutes of all general meeting are required to be

 made by  the secretary of the meeting providing a record of the  deliberations and actions

taken. The minutes must be signed by the directorate and a copy thereof must be kept at the principal office of the company.

5.12. Filing and Registration of Minutes

Whenever a general meeting takes action on of the following matters, a copy of the relevant  resolution must be filed with the Companies Registration Office for registration in a register (book) maintained by that office:

(1) Election of director or inspector

(2) Approval of the balance sheet

(3) Decrease or increase in the capital and any change in the Articles of Association.

(4) Winding up of the company and the manner of liquidation.

5. 13. Publication of Minutes

In addition to the filing and registration requirements mentioned in Section 5.12 above, notice of action taken by a general meeting (or by the board) on the following matters is required to  be published in the general circulation newspaper designated by the shareholders and in the Official Gazette:

(1) Election of directors or inspectors

(2) Decrease or increase in the capital and any change in the Articles of Association.

(3) Winding up of the company and name and particulars of the liquidators.

5.14. Adjournment

A general meeting may be adjourned for a period of up to two weeks by the directorate with the approval of the meeting. In such a case, no new notice is required and the quorum requirement for the adjourned session will be same as for the original session.

5.15 Minority Shareholders Call

Minority shareholders owning in the aggregate one – fifth (1/5) of the company’s shares are entitled to request the board and the inspectors to call a general meeting at any time. If the board and the inspectors fail to call the requested meeting, then the shareholders, themselves, are entitled to call the meeting.

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