GIBRALTAR Law and Practice Contributed by: Adrian Pilcher, Stuart Dalmedo and Louise Anne Turnock, ISOLAS LLP
5.2 Role of Shareholders in Company Management Ordinarily, it is the board of directors that makes the day-to-day decisions affecting the company, and the articles of association normally govern how the directors exercise the powers of the company. The board of directors will involve the shareholders and call them to a meeting only when the need arises under the Companies Act – for example, because it is required to change the articles of association or to change the com - pany’s name. Shareholders cannot simply overturn board decisions if they do not like the way in which the board is running the company. Instead, the shareholders have the right to appoint and remove directors from office in the articles of association. Therefore, the shareholders could remove the directors from office and replace them. In doing so, the shareholders should con - sider any potential employment or company law repercussions. 5.3 Shareholder Meetings There are two types of meetings of shareholders of a company, namely:
be set out in the company’s articles of associa - tion. In addition, shareholders may also elect to enter into a private shareholders’ agreement to govern the terms on how they will behave in relation to the company. However, a shareholders’ agree - ment is not compulsory. In addition, sharehold - ers cannot be compelled to enter into a share - holders’ agreement, and they may choose to do so only if it is in their interests. Therefore, while the articles bind all of the shareholders and the company, a shareholders’ agreement would only bind the shareholders that are party to the agreement, and the usual remedies for breach of contract will be available if any of the parties commits a breach of its terms. Shareholders’ agreements may take many forms, and the need for them can arise in very different circumstances. The key benefit offered by a shareholders’ agreement is that it is a pri - vate document which, in most cases, does not need to be made publicly available. A sharehold - ers’ agreement can therefore deal with private and personal matters which the shareholders prefer to keep off the public record. The arti - cles of association, however, must be filed at Companies House and made available for pub - lic inspection. It must be noted, however, that shareholders’ agreements must not include anything that fetters the company’s powers to exercise its statutory duties. Shareholders’ agreements can also be useful to protect minority shareholders, as general con - tractual principles establish that all shareholders would need to approve a change to the agree - ment; whereas under the Companies Act, share - holder power is determined by a proportion of voting rights in the company.
• annual general meetings; and • extraordinary general meetings.
On an annual basis, every company should hold a general meeting known as the compa - ny’s annual general meeting, in addition to any other meetings in that year, and should specify the meeting as that in the notices calling it. Not more than 15 months should elapse between the date of one annual general meeting of a com - pany and that of the next. However, as long as a company holds its first annual general meeting within 18 months of its incorporation, it need not
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