I'm hoping fellow OzBargainers can share some specific knowledge or experience regarding Shareholders meetings.
Background: I'm a minority shareholder (25%) in a Pty Ltd company. The other shareholder (75%) is Managing Director. (I co-founded the company and was a director initially, however I resigned after a few years as we weren't getting along. I stayed on as an employee). The business is currently up for sale to end the business relationship after close to 20 years. Whilst we have kept things amicable, we don't speak to each other unless we have to, and I wouldn't trust him as far as I can throw him.
I recently received an informal email from the Director instructing me to be available to hold a "Shareholders meeting" in less than 2 weeks time from the date of the email. The email said he would have info regarding opportunities to sell the business and that if I had any items for the agenda or general business, to provide these to the office by a deadline two days before the proposed meeting. The agenda will then be compiled and distributed prior to the meeting (it was unclear how soon before the meeting the full agenda would be provided to me).
Now, the thing is, in close to 20 years we have never had a single shareholders meeting, or any meeting with a format outlined in this email. Sure, we have had countless meetings and discussions about the company and day-to-day running of the business, including recent discussions regarding progress on the sale of the business, but we have never met under any conditions of a precompiled agenda, and so I am wary as to what he is up to with this email. My understanding is that the only reason for calling a shareholders meeting is to vote on resolutions.
The company does not have a constitution or shareholders agreement in place, therefore I have looked at the Corporations Act regarding rules for calling a Shareholders meeting. It says before a meeting of members takes place, the company must give its members at least 21 days notice, and the notice must include planned business for the meeting.
Therefore I am of the opinion that the meeting has been being incorrectly called, as I haven't been given the minimum notice or been informed of the full agenda. Obviously the Director has an agenda in mind otherwise he wouldn't have called the meeting in the first place. And why call our first ever shareholders meeting unless he intends to bring (at very short notice) a resolution to be voted on?
The only benefit of the doubt I can give the Director, is that he may have confused the process of calling a shareholders meeting with that of a board meeting, as the agenda-setting process outlined certainly sounds like that of a board meeting.
I realise a common response to these types of post is to seek legal advice. The reality is I have already wasted good money on bad advice from a Solicitor regarding previous issues in this Company and it cost me dearly in being tricked by the Director into agreeing to outcomes that reduced my share of the profits. Therefore I'm not in a hurry to seek professional advice just yet, but will seek out a good Solicitor when a sale of the business is imminent.
tl;dr: How are Shareholders meetings in a small company usually called? What is their purpose? Should I be wary of a Shareholders meeting called at short notice and without an agenda provided?
Better coming from internet of strangers?
Anyways, it does sound like the director has a scheme in mind, to use you for some hidden agenda as a “tool” to sell the business, so that he can tick some boxes somewhere to complete due diligence.