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Every corporation must have an annual shareholders meeting. Proper notice of the meeting must be given and specified information must be provided to the shareholders in advance of the meeting. The law requires that certain matters be placed before the shareholders at each annual meeting.
Legal Requirement for Meeting
The Business Corporations Act (Alberta) requires that an annual meeting of shareholders of a corporation take place no later than 18 months after the date of its incorporation, and thereafter annually within 15 months after the last preceding annual meeting.
If the directors fail to call a meeting, then any shareholder can apply to a Court for an order that the meeting be called and held in accordance with the requirements of the Act. Alternatively, the holders of five percent of the voting shares of the corporation may requisition the directors to call a meeting, and if the directors do not call a meeting within 21 days, then any shareholder who signed the requisition may call the meeting and the corporation is responsible to reimburse to such shareholder the reasonable expenses incurred in requisitioning, calling and holding such meeting.
Notice of Meeting
The Act requires that notice of the time and place of the meeting of shareholders be sent not less than 21 days and not more than 50 days before the meeting to each shareholder, to each director, and to the auditor of the corporation. The Act also requires that audited financial statements, approved by the directors, be sent to each shareholder not less than 21 days before the date of the annual meeting.
The above requirements for a 21 day notice and for audited financial statements are absolute and must be complied with unless each and every shareholder waives the requirement in writing each year.
Information Circular and Proxy
In addition to the audited financial statements, if a corporation has 16 or more shareholders, then the corporation must, along with its notice of meeting, provide to each shareholder a form of proxy and a management proxy circular containing details about the corporation and its activities as specified in the regulations. A copy of the management proxy circular must also be sent to the auditor of the corporation.
Business of Meeting
The regular business to be dealt with at an annual shareholders meeting consists of consideration of the financial statements and auditor's report; the election of directors; and the appointment of the (incumbent) auditor. Any other business to be discussed at the shareholders meeting is considered to be "special business" and is out of order and may not be discussed unless described in sufficient detail in the notice of meeting. To this end, any shareholder is permitted to submit an item of special business to the corporation, in which case such item must be included by the corporation in the notice of meeting and in the management proxy circular. Any such item or proposal must be submitted by the shareholder to the corporation at least 90 days before the anniversary date of the previous annual meeting of shareholders.
Penalties for Non-Compliance
In addition to civil penalties of damages and a Court Order for compliance, the Act prescribes that directors of the corporation who fail to comply with the requirements of the Act are liable to a fine of $5,000.00. It is therefore extremely important that the directors be vigilant in holding an annual shareholders meeting and in providing to each shareholder the information to which such shareholder is entitled, unless each and every shareholder specifically waives such requirement in writing.