Buying And Living in a Multi-Unit Development Property in Ireland
12. Annual General Meetings
12.1 Introduction
With the exception of single member companies, all companies must hold an annual general meeting (AGM) each calendar year. No more than 15 months should elapse between each meeting.
The AGM is held to inform the members of the activities and plans (financial and operational) of the company.
The obligation to call an AGM rests on the company acting through its directors and secretary. Where an AGM is not held, both the company and its officers commit an offence under company law.
The details set out in this section only provide an overview of the process and procedures associated with the company's AGM.
More detailed information may be obtained from the Office of the Director of Corporate Enforcement at: www.odce.ie
12.2 Why are AGMs important?
The purpose of the AGM is to review the company's performance and plans for the future.
The most fundamental privilege associated with membership of a management company is a right to participate in its governance and decision-making. The AGM provides members with the opportunity to do this.
At the AGM some members may agree to serve on the board of directors of the company.
As stated earlier, the board will run the company on behalf of members and in the case of management companies, will make the decisions for that year about the development.
Whether or not you are on the board of directors, once you buy a unit and become a member of the management company you have an interest in how the company is run.
Key decisions in relation to how the management company is being run may be taken at the AGM and it is important that you attend and have your say.
12.3 What issues are discussed at an AGM?
A wide range of issues may be raised and discussed at an AGM and it is not possible to provide an exhaustive list of the type of issues which may be raised or form part of the agenda.
The agenda is essentially a list of the issues which will be discussed at the meeting.
If there are particular issues which you wish to raise at the AGM you should advise the company secretary in advance so that your issues are included on the agenda.
Issues which may form the typical management company agenda at AGMs are:
- Minutes of the previous Annual General Meeting;
- Approval of the company's accounts;
- Directors' and auditors reports;
- Election of directors in place of those retiring;
- Discussion of plans and budgets for the following year;
- Appointment of the company secretary and directors;
- Discussion and review the performance of any contractors especially managing agent;
- Discussion of major common area maintenance and service charges contributions;
- Discussion on general concerns of members or directors;
- Discussion and agreement (by vote) of decisions in relation to how the company is run;
- Appointment or reappointment of company auditors/legal advisor/managing agent;
- Voting on Changes to the Articles of Association if appropriate.
Before the AGM is held each year, the directors should prepare and circulate a copy of the management company's audited accounts for the previous year to the members.
Typically, the accounts will be presented by the directors and discussed by the members as an agenda item at the AGM.
The audited accounts must also be lodged with the Companies Registration Office.
12.4 What is a Directors' Report?
As well as the company's financial statements, (see section 13) under company law, the directors must present a report on the state of the company's affairs at the AGM.
The purpose of the directors' report is to provide the members with comprehensive and intelligible information on the company's affairs. The report should outline:
- Any important events affecting the company which have occurred since the year end;
- An indication of likely future developments in the business of the company;
- A fair review of the activities of company the during the financial year;
- The steps that the directors have taken to ensure compliance with the requirement for the company to maintain proper books of account;
- The exact location of the books of account.
12.5 Information provision by the directors at the AGM
There is no limit to the amount of information which can be included in the directors' report.
Company law sets out only the minimum amounts of information to be disclosed and there is nothing to prevent the directors from disclosing as much information in their report as they see fit.
In the interest of openness and transparency as much information as possible on the affairs of the management company should be contained in the directors' report.
This information should be presented in a plain and intelligible manner that all members can understand
.Directors should ensure they provide enough information to ensure members understand how the company is performing and why certain decisions have been taken.
While there are a number of standard reporting obligations on companies under company law, management companies are advised to provide as much detailed information (e.g. income and expenditure breakdowns) as possible on a regular basis and in a format that is easy to understand.
This may help alleviate a lot of member concerns particularly with regard to how the service charges budget is being spent and ascertaining value for money.
It is also open to the members to request that the company's articles of association specify that the directors' report contain specific information on issues they wish to be formally updated on at least on an annual basis.
12.6 How is an AGM called and held?
The Articles of Association should set out the process under which the AGM will be called and how members will be given notice that the AGM will take place.
Under company law, members must be given sufficient notice of when the AGM will be held (at least 21 days).
The notice should specify the place, date and time of the meeting. The notice should also contain a clear outline of the matters to be dealt with at the meeting.
Members should also receive information in relation to both the company's activities and its finances.
Where an AGM is overdue or has not been held, a company member can request the Office of the Director of Corporate Enforcement to direct that an AGM be held.