SGX Regulator’s Column: What Boards And Requisitionists Should Take Note Of In Shareholder-Requisitioned Meetings

Introduction

Issuers are required, under the Companies Act 1967 (“Companies Act”) and the SGX-ST Listing Rules, to hold a general meeting each year, known as the “annual general meeting”. In addition to the annual general meeting, issuers may hold general meetings at any other point in a year. These are known as “extraordinary general meetings”.

The board of directors (“Board”) is typically the party that calls for general meetings as the Board is statutorily allocated the power to manage the business of the issuer. Nevertheless, occasions may arise where shareholders may wish to draw certain matters to the attention of other shareholders.

One way a shareholder (or shareholders acting together) (“requisitionists”) may do so is to requisition a general meeting (“Requisitioned Meetings”) to put resolutions before other shareholders. Resolutions tabled may be for a myriad of purposes, including removing or replacing the entire Board or specific directors, or to effect or terminate particular transactions.

This column sets out Singapore Exchange Regulation’s (“SGX RegCo”) expectations of Boards and shareholders so as to ensure that the interests of shareholders as a whole is protected.

Convening a Requisitioned Meeting

The mechanisms relating to Requisitioned Meetings are typically contained in the relevant law governing the issuer’s Constitution or incorporation. Therefore, the validity of Requisitioned Meetings is also an issue to be determined under the governing law. The relevant provisions in Singapore are in Sections 176 and 177 of the Companies Act.[1] The SGX-ST Listing Rules do not have prescription over these matters.

Under Section 176 of the Companies Act, the obligation falls on the Board to convene the Requisitioned Meeting upon receipt of a valid requisition from the requisitionists, whereas, under Section 177 of the Companies Act, the requisitionists themselves are required to take steps to convene the Requisitioned Meeting. The key differences between Section 176 and 177 of the Companies Act are as follows:

	Section 176	Section 177
Minimum Number of Requisitionists	One	Two
Shareholding of Requisitionists	10%	10%
Board’s Involvement	Board obligated to take steps to convene the Requisitioned Meeting. If the Board does not comply in respect of a valid requisition, the Accounting Corporate Regulatory Authority (ACRA) has stated that they will not hesitate to investigate and undertake enforcement action, as appropriate.[2]	Shareholders themselves call the Requisitioned Meeting.
Timeline	The Board has up to 21 days to proceed to convene the Requisitioned Meeting; the Board must hold the Requisitioned Meeting as soon as practicable, and within 2 months after the date of receipt of the requisition. If the Board fails to proceed to convene a meeting within 21 days after the date of the deposit of the requisition, requisitionists may convene the Requisitioned Meeting, in which case, the meeting may be convened in the same manner as nearly as possible, as that convened by the Board. The Requisitioned Meeting must be held within 3 months after the date of the deposit of the requisition.	There is no specific provision that requisitionists need to give any notice to the Board, or exhaust any timeline for the Board to act.
Costs	Requisitionists need not bear the costs of the Requisitioned Meeting; the costs will be borne by the issuer. If the Board does not convene the Requisitioned Meeting pursuant to a valid requisition, any reasonable expenses incurred by requisitionists will be recoverable from the company.	There is no specific provision that the costs will be borne by the issuer.
Procedural Requirements to be taken by Requisitionists	The requisition must state the objects of the Requisitioned Meeting, be signed by the requisitionists, and be deposited at the issuer’s registered office.	Written notice of the Requisitioned Meeting must be served on every shareholder having a right to attend the Requisitioned Meeting, not less than 14 days or such longer period as is provided in the issuer’s Constitution for ordinary resolutions.

Actions that requisitionists should take to requisition a meeting

Requisitionists may elect to utilise either Section 176 or 177 of the Companies Act to convene a Requisitioned Meeting. In all cases, requisitionists should not put forth any proposal or material that is clearly frivolous, vexatious or defamatory.

Under Section 176 of the Companies Act, requisitionists should ensure that a valid requisition is submitted to the Board. Requisitionists should also be forthcoming in providing the Board with any information they may reasonably require to convene, and table the requisite resolutions at, the Requisitioned Meeting.

Where requisitionists decide to avail of the mechanism in Section 177 of the Companies Act, they should note that the burden falls on them to ensure that all applicable procedural requirements relating to the convening, and conduct, of the Requisitioned Meeting, including those in the Companies Act, SGX-ST Listing Rules and the issuer’s Constitution, are adhered to. This includes the giving of proper notice of the Requisitioned Meeting to all shareholders. The notice may also be accompanied by a circular to shareholders, containing fuller details on the proposals tabled by the requisitionists.[3]

In this regard, SGX RegCo notes that requisitionists may require the issuer’s assistance to disseminate the notice of the Requisitioned Meeting to each shareholder. The issuer’s Constitution may also contain provisions requiring that proxy forms completed by shareholders be deposited at the issuer’s registered office. Therefore, it is particularly pertinent for requisitionists to be able to rely on the co-operation of the Board to facilitate these procedural requirements.

Actions that Boards should take upon receiving a requisition

When the Board receives a requisition for a Requisitioned Meeting, the issuer should immediately inform shareholders through SGXNET, and provide the Board’s response. Shareholders should also be kept updated on subsequent material developments.

In addition, Boards should consider the following:

Boards should seriously and objectively consider the objects of the requisition, including any proposed resolutions put forth by the requisitionists. While the requisition may be unwelcome, Boards should consider the merits of the proposals from the perspective of the issuer and its shareholders as a whole.
Boards should reach out to the requisitionists to discuss their concerns. Even if Boards hold a different view, the Board’s understanding of the concerns of the requisitionists is important in order for the Board to respond appropriately.
A public dispute does not serve the interests of the issuer or its shareholders as a whole. Boards should seek to find common ground with the requisitionists. This may include taking on some of the suggestions proposed.

Conclusion

Regardless of the route adopted by requisitionists (i.e. whether under Section 176 or 177 of the Companies Act), SGX RegCo expects all parties – Board, requisitionists and their respective professional advisers – to work together to achieve the common goal of the successful conduct of the Requisitioned Meeting.

It is imperative that shareholders have all facts available to them, including the Board’s position, to consider the matters put forth by the requisitionists so that they can make decisions on an informed basis on the merits or demerits of the resolutions tabled by the requisitionists at the Requisitioned Meeting.

SGX RegCo also wishes to emphasise that the Requisitioned Meeting should be conducted expeditiously. A protracted delay in the completion of the Requisitioned Meeting would result in uncertainty to shareholders. It would also unnecessarily detract the issuer’s management and Board from the conduct of the issuer’s business.

Tan Boon Gin

CEO

Singapore Exchange Regulation

[1] While this Regulator’s Column makes specific references to provisions applicable to issuers that take the form of a company incorporated in Singapore, analogous provisions are applicable to trusts, such as REITs and business trusts, through the Business Trusts Act and the Code on Collective Investment Schemes. The statutory position for foreign issuers would depend on the relevant statutory provisions (if any) in their country of incorporation.

[2] Raphael Lim, “Battle for the Board”, The Business Times (21 January 2023).

[3] Depending on the resolution that is proposed to shareholders, additional requirements may apply. By way of example, a proposal for the appointment of a new director to the Board should also be accompanied by the proposed director’s consent to act as a director of the issuer, and detailed information on the proposed director, to enable the issuer’s Nominating Committee to consider the suitability of the director.