Identification of the ordinary Businesses

Q. One of your friends has reviewed the notices of annual general meetings (AGMs) of about a dozen public limited companies which have been incorporated in the year 2010. He observed that the 1st annual general meetings of all those companies were held in the year 2011 and 2nd annual general meetings were held in the year 2012. He noted that agenda items of the companies include four ordinary businesses as mentioned in the section 160 (1) (b) of the Companies Ordinance, 1984.

He also observed the following:

(i)           Two of the ordinary businesses were common and discussed in both the meetings.

(ii)          One of the businesses was transacted in the 1st annual general meeting but not in the 2nd annual general meeting.

(iii)         The remaining one did not follow any fixed pattern i.e., it was transacted in either 1st or 2nd meetings, both or none of the two.

Required:

Identify the ordinary business items related to each observation at (i), (ii) and (iii) above. Also substantiate the reasons.                           

Ans: Identification of the ordinary Businesses:

(i) Consideration of the accounts, balance sheets and the reports of the directors and the auditors and

The appointment and fixation of remuneration of the auditors.

These items being of regular nature are invariably transacted in all annual general meetings in the normal circumstances.

(ii) Election of directors

It would be held in the 1st AGM and then every 3rd year i.e. in the 4th, 7th and so on.

(iii) Declaration of Dividends

That can be made in either, both or none of the two depending on the profitability, cash flow and other considerations before the board.