2.5.3.1 The annual general meeting

A CIC has members and/or shareholders depending on whether it is a CIC limited by guarantee or by shares. CICs limited liability by shares may refer to ‘members’ and ‘shareholders’ interchangeably. For CICs which are limited by guarantee and that consequently have no share capital, ‘members’ are considered to be either the guarantors of the company or other persons admitted into membership. This means that these types of CICs have no shareholders.

The rules regarding membership of a company are set out in Section 112(1) of the 2006 Act, which stipulates that the subscribers of a company’s memorandum should be deemed in agreement with becoming members of the company.1 The 2006 Act also contains provisions that provide limited powers and statutory rights to the general meeting of shareholders/members of the limited liability company.2 These powers may be exercised by the shareholders of limited liability companies including CICs, in the general meeting or by written resolutions outside a general meeting (in the case of a private limited liability company).3 However, when a CIC is a plc, the option to pass a written resolution is not available. Section 336 of the 2006 Act requires plcs to hold general meetings. As such, where a CIC is a plc, it must call on an ordinary general meeting and/or an extraordinary general meeting.4 Either the directors and/or the members or a UK court requests a general meeting.5 The general meeting decides by exercising a voting process, which leads to a resolution. A valid resolution of the general meeting requires the existence of aquorum.6 Resolutions can be ordinary or special. Special resolutions are resolutions of great importance and impact on the company’s most important affairs. For instance, a special resolution is required for a plc to convert to a CIC by changing its name or its AoA.7 An ordinary resolution is passed by a simple majority of those who are present and intend to vote in the general meeting, whereas a special resolution requires the approval of a super-majority, i.e. a minimum of 75% of those who are present and intend to vote.8