How Members Can Force a Company to Hold a Meeting

Every Malaysian secretarial firm writes about meetings from the board’s side, because the board is the client. The result is that the one procedure a minority shareholder actually needs — forcing a meeting the directors do not want — is almost absent from the market.

It is in the Act, it is not difficult, and it runs on short clocks.

Two separate routes into a meeting

The Act gives members two distinct mechanisms, and they are easy to confuse.

Section 310 — convening directly. A meeting of members may be convened by the Board, or by any member holding at least 10% of the issued share capital, or a lower percentage specified in the constitution. For a company without share capital, the figure is at least 5% in the number of members. No requisition, no waiting on the directors.

Section 311 — requiring the directors to convene. Members may require the directors to convene a meeting. This is the requisition route, it puts the mechanics and cost onto the company, and it is the one with the enforcement machinery in ss.312 and 313 behind it.

Note the different measures: s.310 speaks of issued share capital, s.311(3)(a) of paid-up capital carrying the right of voting, excluding treasury shares. In a company with partly-paid or non-voting shares these produce different answers.

The thresholds under section 311

Company	Threshold	Section
Company with share capital	10% of paid-up capital carrying voting rights, excluding treasury shares	s.311(3)(a)
Company without share capital	5% of total voting rights	s.311(3)(b)
Private company, where more than 12 months has elapsed since the end of the last requisitioned meeting	5% of voting paid-up capital	s.311(4)

The s.311(4) route is the underused one. It exists so a minority in a private company cannot be locked out indefinitely, and it carries its own condition — the proposed resolution must not be defamatory, vexatious or frivolous.

Under s.311(6), voting rights for both s.311(3) and s.311(4) are determined at the date the requisition is deposited with the company. A board cannot defeat a requisition by allotting shares after it lands.

What the requisition must say

Section 311(2) sets four requirements. The requisition:

• shall be in hard copy or electronic form
• shall state the general nature of the business to be dealt with
• may include the text of a resolution intended to be moved
• shall be signed or authenticated by the person making it

Including the text is optional but almost always right. Where the requisition includes it, s.312(2) obliges the company to reproduce that text in the notice of meeting, which removes any argument about scope on the day.

Section 311(5) lists the only grounds on which a resolution cannot properly be moved: it would be ineffective for inconsistency with written law or the constitution; it is defamatory; it is frivolous or vexatious; or if passed it would not be in the best interest of the company. These mirror s.302(2) on the written resolution side.

The clocks the directors then face

Section 312(1) is tight:

• 14 days from the date of the requisition to call the meeting
• the meeting must be held on a date not more than 28 days after the date of the notice convening it

Section 312(4) closes an obvious loophole. If the resolution is to be proposed as a special resolution, the directors are treated as not having duly called the meeting unless notice was given in accordance with s.292 — that is, at least 21 days. Directors cannot comply on paper by issuing 14 days’ notice for a resolution needing 21.

When the directors do nothing

Section 313(1) applies where the directors were required to call a meeting and did not do so in accordance with s.312. The requisitionists — or any of them representing more than one half of the total voting rights of all those who requisitioned — may call the meeting themselves.

Three conditions shape it:

• The meeting must be convened within three months of the date the directors received the requisition (s.313(3)).
• It must be convened in the same manner, as nearly as possible, as meetings convened by the directors (s.313(4)).
• Where the requisition included the text of a resolution, the notice must include it (s.313(2)).

Cost falls on the company. Section 313(6) requires reimbursement of the members’ reasonable expenses, and s.313(7) allows the company to retain that sum out of fees or other remuneration due to the directors in default. The minority is not funding the board’s obstruction.

The court route as backstop

Where the requisition machinery cannot work at all — a deadlocked board, a shareholder who will not attend to deny a quorum — s.314 lets the Court, of its own motion or on the application of a director, a member entitled to vote, or the personal representative of such a member, order a meeting to be called, held and conducted in any manner it thinks fit.

Section 314(4) is the practical teeth: the Court may direct that one member present in person or by proxy constitutes a quorum. That defeats the quorum-denial tactic outright.

For a public company that has failed to hold an AGM, there is a parallel and simpler provision in s.340(5), under which the Court may order a general meeting on the application of any member.

Common mistakes

Requisitioning when you could simply convene. If you hold 10% of the issued share capital, s.310 lets you call the meeting yourself without waiting 14 days for the directors. Check which route is faster before writing to the board.

Measuring the threshold against issued capital instead of voting paid-up capital. Section 311(3)(a) is the latter, net of treasury shares.

Omitting the text of the resolution. Optional under s.311(2)(c), but without it the board controls what appears in the notice.

Letting the three months lapse. Section 313(3) runs from the date the directors received the requisition, not from the date they defaulted. The 14-day and 28-day periods eat into it.

Assuming a director can be removed by this route in a private company without a meeting. The requisition gets you the meeting, which is exactly the point: s.297(2)(a) bars removal of a director by written resolution, so a minority pushing a removal must go through ss.311 to 313.

What’s next

Deposit the requisition in a way you can prove — date-stamped delivery to the registered office — because every deadline in ss.312 and 313 runs from that date.

If the object is a director removal, read remove-a-director for the resolution type and the special notice position. For the notice periods that apply to the resulting meeting, see resolution-notice-periods.