Amendment to Companies Act allowing shortened notice period for EGM ratified

President Dr. Mohamed Muizzu, on Wednesday, has ratified the first amendment to the Companies Act which shortens the notice period for Extraordinary General Meetings (EGM).

The Parliament passed the amendment during an extraordinary sitting held on Tuesday. The amendment was passed with the unanimous votes of 85 MPs with no lawmaker voting against it.

The Companies Act currently stipulates that the minimum number of board members in state-owned enterprises will be set by law or a law or presidential decree regarding the formation of such an enterprise.

The new amendment states that the minimum number of board members can also be set in the company’s regulations.

The bill also shortens certain time frames.

It states that if the number of board directors in public and private companies falls below the minimum requirement, new directors must be appointed within 10 days instead of 30.

The bill also stipulates that companies must issue notice for Annual General Meetings (AGMs) within three days of receiving written requests for such meetings, and hold the meeting within 10 days.

The law currently stipulates that companies must issue notice for AGMs within 21 days of receiving written requests for such meetings, and hold the meeting within three months.

The new bill also stipulates that companies must issue a seven-day notice for Extraordinary General Meetings (EGMs) instead of 14 days.

Notably, Parliament finished work on the bill within just two days. In this regard, the initial debate on the bill was held during an extraordinary sitting held on Monday which concluded in one and half hour. On the same day, Parliament’s Economic Committee passed the bill in under 10 minutes on Monday, after deciding that the legislature requires no further review.

During the debate, lawmakers from the main opposition Maldivian Democratic Party (MDP) had expressed concern over a provision in the bill which allows companies to increase the number of board directors. Vaikaradhoo MP Hussain Ziyad alleged it is designed to increase political appointments.

Kendhoo MP Mauroof Zakir said that the bill provides no remedy to the issues facing companies.

However, they had voted in favor of the bill despite the reservations.

Government lawmakers argued that the amendment would benefit companies.

In this regard. , Deputy Speaker Ahmed Nazim, a top lawmaker from the main ruling People’s National Congress (PNC) who represents the Dhiggaru constituency, highlighted on BML’s CEO Karl Stumke’s resignation on September 8, ahead of the EGM.

“An EGM needs to be held quickly to appoint a new CEO. Therefore, we need to shorten the process for EGMs. With this revision, we can hold another EGM soon after the one scheduled for September 21,” he said.

Nazim said the changes will benefit not just BML, but also other companies, including the State Trading Organization (STO), which has initiated the process of taking over Fenaka Corporation.

He said that the companies will need to hold EGMs during the process.