Under the Libyan Commercial Law, the General Assembly (Ordinary General Assembly) and the Extraordinary General Assembly are conducted for various purposes and are regulated under different sets of rules and regulations. The following is a more detailed discussion as to how the two differ from each other in accordance with Law No. 23 for the Year 1378 PD 2010 Regarding Commercial Activities.

Purpose and Powers

The General Assembly, also called the Ordinary General Assembly is given a number of important functions. It has the duty to present and discuss reports of the Board of Directors, the Control Board, and the external auditor per Article 163. It also approves financial statements such as the balance sheet, profit and loss account, and has the power to approve plans with regard to the distribution of the profit. The Assembly appoints the Board of Directors, chairman, and members of the Control Board, and fixes their remuneration. Furthermore, it appoints the external auditor and fixes their fee, whilst also discussing issues presented by the Board of Directors, it also settles issues concerning the responsibility of the Board of Directors and the Control Board. Additionally, this assembly is not allowed to discuss any matter that is not included in the agenda, however, it may discuss issues that are not in the agenda should any pressing issues come up in a meeting upon the request of shareholders that represent not less than 10% of the capital.

On the other hand, the Extraordinary General Assembly is given the power to amend the memorandum and articles of association per Article 167. It may also approve the issuance of loan securities and the appointment of liquidators, whilst determining their limits and powers in compliance with the law, Furthermore, this assembly is conferred with the power to consent to resolutions regarding the disposal of more than half of the company’s assets.

Frequency

The General Assembly should meet once a year at least in a term and not exceeding four months of the company fiscal year closing. This may be prolonged though, but no longer than six months of the closing stated fiscal year as stipulated in Article 158.

The Extraordinary General Assembly, on the other hand, meets when the need arises, especially for key decisions outside the scope of the Ordinary General Assembly. Resolutions are therefore agreed upon in this second assembly as detailed in Articles 167-169.

Quorum Requirements

Regarding the General Assembly, the first meeting is valid by the presence of persons holding more than half the company capital. If in the first meeting, there is a lack of quorum, the second will be valid by virtue of holding the meeting, regardless of the number of persons and value of the capitalized represented as explained in article 165.

The Extraordinary General Assembly however has a stricter quorum. The first meeting is quorate by the presence of shareholders holding over two-thirds of the company capital and resolutions are adopted by the owners of the majority of the capital present. The second meeting will be quorate by a majority representing greater than half of the capital present and the resolutions are taken by a majority representing less than two-thirds of the company capital. Some key decisions however, including the change of the object of the company or deciding to dissolve the company before the end of the term are adopted by a superior majority representing more than half the company capital.

While the General Assembly and the Extraordinary General Assembly are both important to the governance of Libyan commercial entities, they serve different principles and different purposes. The Ordinary General Assembly is responsible for the routine, necessary business of such an entity, such as the approval of financial statements and the election of important personnel, while the Extraordinary General Assembly is responsible for the important changes, such as amendments to corporate documents or the disposal of important assets. It is a useful process in good corporate governance and compliance with Libyan Commercial Law to understand the difference.

By: Monther Baara

Supervised by: Dr Mazen Tumi