Shareholders exercise their powers by passing resolutions in shareholder meetings. There are two types of meeting: the Annual General Meeting (AGM), which is held once a year, and other general meetings (eg Extraordinary General Meetings (EGMs). The board of directors has the power to call meetings, notice of which must be given to shareholders in writing within a specified period prior to the meeting.
Resolutions are only validly passed if the meeting is quorate (i.e. a certain number of people must be present). Proxies are often appointed by shareholders to take part in and cast votes at meetings in their place. Ordinary resolutions, which require a majority of over 50% of the votes cast to be passed, are used for all matters unless another form of resolution is required by statute or the bylaws. Special resolutions and extraordinary resolutions, which often require a majority of two-thirds or 75% to be passed (sometimes referred to as a ‘supermajority’), are required for important matters such as alteration of the charter or bylaws (memorandum of association and articles of association in the UK), a change of name, a reduction of capital, a modification of the rights of classes of shareholders or a winding up of the company. A written resolution signed by all the shareholders may be passed by a private company to resolve on most issues which could have been passed by the company in general meeting. In this case, a meeting is not required and no prior notice is necessary. But the resolution can only be passed by unanimous agreement of all the members who, at the date of the resolution, would be entitled to attend and vote at a meeting that would otherwise have been held to pass it.