Does LLC Need to Have an AGM? – Here’s a Detailed Explanation
To establish a business in the mainland of Dubai, every company must comply with the regulatory framework issued by the UAE Government, the organizational policies, and procedures.
For many years, it had been a debate whether to conduct an Annual General Meeting (AGM) and is it mandatory to hold an AGM within a specific timeframe, especially for a Limited Liability Company (LLC) in UAE?
This blog will explain all you need to know about conducting an AGM in UAE by an LLC company.
The Requirement to Hold an AGM by an LLC
LLCs are required to conduct an annual general meeting (AGM) at least once a year within four months after the end of the relevant financial year, as per Article 92 of the Commercial Companies Law.
Law also states that meetings should be called by the general manager or the company’s management board.
Penalties in Case of Failure to Conduct an AGM
The failure in convening the annual general meeting within the specified period stated by the Commercial Company Law will attract penalties ranging from AED 50,000 to AED 1,00,000.
Role of Partners and Managers in AGM
Proxies and Representatives
Partners-
Each partner of the LLC is mandated to attend the annual general meeting, whether themselves or through a proxy, even if a partner holds a minor percentage of shares.
Managers-
Managers are not allowed to be represented by proxies as they are entitled to answer all the questions and assessments regarding the company’s financial position.
Quorum and Attendance
In the case of LLCs, 75% or more of the share capital must be presented in the AGM, either personally or represented by the proxy.
Requirements of Voting in AGM
Any resolution will pass only if the majority of the partners or representatives, as the case may be, favor the resolution by voting. The company’s memorandum of association states the percentage of the majority in that case.
Voting must be taken by show of hands, and voting results must be recorded in minutes of the meeting, mentioning resolution details. Details of resolution contain the names of shareholders who favored the matter and who were against it.
Adjournment of the Meeting
While in the case of the first adjournment of the meeting, 50% or more of the share capital must attend the meeting personally or by proxy.
Any adjourned meeting held after the second adjournment will be no quorum requirement; resolution can be taken by voting any company member.
Agenda of the Meeting Should be:
- Review of general manager’s overall activity and financial position of the company,
- Approving financial statements,
- Appointment of general manager and approval of remuneration,
- Approving auditor’s appointment and fees,
- Dividend distributions,
- Other material cases as mandated by CCL or Memorandum of Association (MOA).
Conclusion
Directors of the company must hold AGM to avoid any penalties and remain compliant with regulations of CCL while also protecting the interest of the company, shareholders, and directors themselves.
How Can We Help?
At Flyingcolour, you can get the proper consultations for all your Commercial Company Law requirements. Our qualified professionals can help you comply with various provisions applicable to your LLC.
We also provide accounting, taxation, financial modeling, company registration, and PRO services.
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