We have posted several blogs consecutively in connection with the governance of company in particularly, Authorities of Shareholders Meetings and Board of Directors’ meetings and Secretary of Board of Directors.,etc.
This time, we would like to raise the procedures of calling regular and special shareholders meetings under the recent legislation in Mongolia. It may take an interest of the foreign investors or businessmen who cooperate with the legal entity of Mongolia thought the company operations in Mongolia.
As we all aware that the shareholders meeting is the highest governing authority of a company. The shareholders meeting can be either regular or special.
The regular shareholders meeting shall be called by the Board of Directors and held within four (4) months following the end of each fiscal year of a company. If there is no Board of Directors in the limited liability company, the executive body will in charge of this obligation. The authority of the Board of directors shall terminate whether a regular shareholder meeting is not called and held within the period abovementioned. It means that any agreements or transactions entered into after the termination of the authority of the Board of Directors shall be invalid.
As for the special shareholders meetings, The Board of Directors shall call the special shareholders meeting in the following cases:
- more than 50 percent of the Board of Directors not to work or not possible to work;
- two (2) or more independent members of the Board of Directors, shareholder(s) of 10 or more percent of voting rights has issued a proposal or demand;
- the losses incurred by the company exceeds 30 percent of the owner’s equity at the time of the last financial report;
- the company debt has exceeded the owner’s equity two (2) years in a year, and is a negative figure;
- the Board of Directors has issued a decision;
- the audit committe has demanded to convene a special session of the shareholders meeting;
- all other cases specified in the company charter.
The Board of Director makes a decision whether or not to call such special shareholder meeting within ten (10) business days following the date that they receive the demand by shareholder(s) who owned 10 or more percent of voting rights of the limited liability company. In the case, the Board of Directors decides to call the special meeting demanded by the shareholders; such meeting shall be called within forty-five (45) days following receipt of the demand.
If the decision of the Board of Directors to refuse to call a special shareholders meeting, the shareholder making such proposal or demand are entitled to appeal to a court against the Board of Directors’ resolution.