Companies Act 2014 section 1111

Obligation to convene extraordinary general meeting in event of serious loss of capital

Section 1111 requires the directors of a PLC to call an extraordinary general meeting when the company's net assets fall to half or less of its called-up share capital.

• If a PLC's net assets drop to half or less of its called-up share capital, the directors must convene an extraordinary general meeting within 28 days of a director becoming aware of the situation
• The meeting must take place within 56 days of the date a director first became aware of the capital loss, and its purpose is to consider what measures, if any, should be taken to address the situation
• Any director who knowingly and deliberately fails to convene the meeting, or allows that failure to continue, commits a category 3 offence
• This requirement does not apply to companies subject to the resolution tools, powers or mechanisms under Part 4 of the Bank Recovery and Resolution Regulations