2. Company Decision Making + Shareholders

Question 1

How are votes counted for a written resolution circulated to the shareholders?

Answer 1

1 vote per share owned
Ordinary resolution
- More than half of votes signifying agreement
Special Resolution
- 75% or more votes must signify agreement

Question 2

Can all companies use the written resolution method?

Answer 2

No, permitted for private companies but not for public companies by the CA 2006

Question 3

When is it necessary to have a further board meeting after a shareholder’s meeting?

Answer 3

• Only necessary when it is a decision which the directors require authority to enter into
• Otherwise (decision for shareholders alone), ends at the shareholders meeting

Question 4

Who are ‘eligible members’ for the purpose of written resolutions?

Answer 4

WR must be circulated to all eligible members:
- Eligible members are shareholders who are entitled to vote on the resolution as of the circulation date of the resolution

Question 5

How can a meeting be authorised to be held on ‘short notice’ - does this change for private and public companies?

Answer 5

(1) Majority of company shareholders
(2) who between them hold 90% or more of the company’s voting shares must consent (95% for public companies)

Question 6

How are votes counted in a poll vote?

Answer 6

1 vote for each share owned by shareholders

Question 7

Who can demand a poll vote according to the model articles:

Answer 7

• chair of the meeting
• directors
• two or more people having the right to vote on the resolution or
• a person / persons representing not les than 10% of the total voting rights of all shareholders having the right to vote on the resolution

Question 8

Minimum notice period for a general meeting?

Answer 8

14 clear days
- clear = the day notice is received by shareholders and day of general meeting itself are not counted for purposes of the notice (only days between the two)
- includes weekends / non-business days

Question 9

If notice is sent by post or email for a general meeting - when is it ‘deemed received’

Answer 9

48 hours after it was sent (only business days)*
- this is added onto the 14 days

Question 10

How long do you have, after getting a written resolution, to signify your agreement? According to the Model Articles

Answer 10

• lapse date is 28 days from circulation, regardless of method

Question 11

When can a Poll Vote be called?

Answer 11

(MA): can be demanded before, during or after voting

Question 12

If a poll vote is called after voting has taken place in the general meeting - which outcome will prevail if the two contradict?

Answer 12

The outcome of the poll vote will override outcomes of the show of hands vote

Question 13

What is the quorum of a shareholder’s general meeting?

Answer 13

Generally, 2
- But if only 1 shareholder, Q = 1

Question 14

How is voting ‘done’ in a general meeting? How are votes counted?

Answer 14

By a share of hands, with each shareholder getting 1 vote

Question 15

If a shareholder has a personal interest in the matter discussed at the general meeting, are they prevented from voting? How is their vote counted?

Answer 15

(1) Shareholders are not prevented from voting
(2) Vote will be counted UNLESS it is a deciding vote on matters like:
i. resolution to buy back some of all a shareholder’s shares
ii. ordinary resolution to ratify a director’s breach of duty (when the director in Q is also a shareholder)

Question 16

Which decisions CANNOT be taken on short notice by the shareholders?

Answer 16

(1) removal of a director
(2) Long Term Service Contract
(3) Loan to a director

Question 17

If you want to hold a meeting about a service contract on short notice, can you? What alternatives are there?

Answer 17

1. No
2. Can file a written resolution, stapling the service contract to it

Question 18

How do the shareholders request decision-making by written resolution? Does this change based on the model articles?

Answer 18

1. (Standard MAs) Shareholder / shareholders must have 5% or more of voting rights in company can demand this
2. (Amended MAs) May make this figure below 5% but CANNOT INCREASE IT

Question 19

Once shareholders / a shareholder have submitted their statement of 1000 words to accompany their written resolution to the company, how long does the company have to circulate this?

Answer 19

The company has 21 days from the request of the shareholders to circulate it

Question 20

If the company has to incur expenses to circulate a written resolution, who pays these?

Answer 20

The shareholder requesting circulation must pay any company expenses in complying with the request

Question 21

If a director has a personal interest in a proposed transaction, can they vote on the resolution?

Answer 21

1. No, if the companies have unamended model articles (MA 14)
2. Yes, if MA 14 has been disapplied

Question 22

If a director has a personal interest in a proposed transaction / arrangement with the company, do they have to make this known?

Answer 22

• Yes, this is consolidated by statute and cannot be disapplied by company articles

Question 23

If a director has a personal interest in a proposed transaction / arrangement with the company, do they have to make this known? Are there any exceptions?

Answer 23

(1) Yes
(2)
i. If it cannot reasonably be regarded as likely to give rise to a conflict of interest
ii. if other directors are already aware of it
iii. if it concerns terms of a service contract that have been or are to be considered…by a meeting of the directors.

Question 24

When can directors pass a board resolution in the form of a resolution in writing?

Answer 24

If company has Model Article 8 still, they can pass resolution in writing if they can show that decision is unanimous

Question 25

Is a director entitled to attend a shareholder meeting?

Answer 25

Yes, even if they are not a shareholder themselves

Question 26

Can a shareholder go to a board meeting (if they are not a director)

Answer 26

No

Question 27

If a director cannot attend a board meeting, can they appoint a proxy to send in their place?

Answer 27

Generally NO, unless special amended Articles permit this

Question 28

Are all companies required to hold AGMs in the CA 2006?

Answer 28

Only public companies

Question 29

Relevant paperwork when changing company name:

Answer 29

a copy of the special resolution to change the name must be filed (s.29 (1) (a) Companies Act 2006 (CA 06)) and the Registrar must be notified (s.78 (1) CA 06). The relevant form is the NM01 and there is a prescribed fee which must be paid.

Question 30

Through which decision making process are dividends ‘declared’

Answer 30

Formally declared by ordinary resolution (but recommended by directors in board meeting who call general meeting)

Question 31

For an ordinary resolution to be passed using the written resolution procedure: what is the required majority (and what if people abstain?)

Answer 31

The required majority is MORE THAN 50% of the total voting rights of the eligible members including those abstaining

Question 32

If the shareholders requisition a general meeting, when must the directors call the general meeting and when must the meeting be held?

Answer 32

If the directors are required to call a general meeting, they must first call that meeting within 21 days from the date of the shareholders’ request. Having called the meeting, the meeting must then take place within 28 days (s.304 CA 2006)

Question 33

Filing requirements following an ordinary resolution authorising a SPT

Answer 33

If there is a SPT, nothing needs to be filed at companies house (because it is just an ordinary resolution)

Question 34

When can the shareholders require the directors to call a GM?

Answer 34

Whenever, if shareholders have atleast 5% of all shares (entitled to vote)

Question 35

What powers do shareholders have wrt getting rid of directors?

Answer 35

1. shareholders do not have the right to terminate a director’s employment contract BUT
2. they have the right to remove a director from office (ordinary res)

Question 36

Who is bound by a shareholders agreement?

Answer 36

Those shareholders who are party to the agreement