7. Companies: Joint Decision Making Flashcards

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1
Q

Who usually calls meetings?

A

Directors

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2
Q

A shareholder holding at least what % of the paid-up voting capital can require the directors to call a meeting, within what time must the directors (1) call the meeting and (2) hold the meeting?

A

5%. Called within 21 days; held within 28 days.

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3
Q

What happens if the directors fail to call the meeting (after a s 303 request from members holding >= 5% share capital)?

A

The shareholder who requested the meeting, or any shareholder(s) holding 50% of the voting rights can call the meeting themselves

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4
Q

When can the court call a meeting?

A

If it is impractical/impossible for the company to call it, e.g. deadlock between shareholders

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5
Q

To whom must notice of a general shareholders meeting be given?

A
  1. All shareholders and directors
  2. Personal representatives of deceased shareholders
  3. Trustee in bankruptcy of any bankrupt shareholders
  4. Auditor, if there is one
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6
Q

In what four forms can notice of a meeting be?

A
  1. In writing
  2. Electronically
  3. By email
  4. Via a website
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7
Q

What five things must the notice of the meeting contain?

A
  1. Company name
  2. Time, date and place of the meeting
  3. General nature of business to be carried on at the meeting
  4. Right to appoint a proxy to attend
  5. Full text of any special resolution
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8
Q

How much notice must be given for a general meeting?

A

14 clear days, unless articles provide for longer

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9
Q

How much notice must be given if a shareholder is calling a meeting to remove a director?

A

28 days

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10
Q

What additional time period is added where notice is communicated by a method other than hand delivery?

A

48 hours

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11
Q

How can you work out notice periods quickly on the exam?

A

Last date notice can be given:
- Meeting date minus 15 days if hand delivered
- Meeting date minus 17 days if other method

Earliest date a meeting can be held:
- Notice date plus 15 days if hand delivered
- Notice date plus 17 days if other method

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12
Q

How much notice must a Plc give for its annual general meeting?

A

21 clear days

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13
Q

What is a shareholder’s option if notice is insufficient?

A

They can seek to have any action taken at the meeting for which notice was insufficient declared invalid

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14
Q

What proportion of shareholders must agree to hold a meeting on shorter notice?

A

Majority of shareholders (in number), holding 90% of the shares

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15
Q

In what situation can the short notice procedure not be used?

A

For matters requiring documents to be left at the registered office for 15 days prior to the meeting

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16
Q

If a company has more than one shareholder, can a single shareholder who is present in his own capacity but also as proxy for another shareholder form a quorum of two?

A

No

17
Q

What proportion of shareholders at a meeting are required to approve (1) an ordinary resolution and (2) a special resolution?

A

Ordinary resolution: Simple majority of shareholders at the meeting
Special resolution: 75% or more of the shareholders at the meeting

Compare with written resolutions which require those percentages of all shareholders.

18
Q

What six things are among those for which a special resolution is required?

A
  1. Amend the articles
  2. Reduce share capital / buy back shares
  3. Wind up the company
  4. Change company name
  5. Disapply pre-emption rights
  6. Change company status, i.e. private to public
19
Q

Within what time period must a special resolution be filed at Companies House?

A

15 days

20
Q

What is the normal method of voting at meetings?

A

Show of hands

21
Q

What is a poll vote and what two groups can demand one?

A

Instead of one vote per shareholder in the show of hands method, it becomes one vote per share, and can be demanded by:

  1. Any two shareholders or more (in the MA, maximum five or more in bespoke Articles), or
  2. Shareholders with not less than 10% of the voting rights or 10% of the paid-up capital
22
Q

Can a Plc pass a written resolution?

A

No, they are available to private companies only

23
Q

Can a written resolution be used for both types of shareholder resolutions?

A

Yes

24
Q

What action can a written resolution not be used for?

A

Dismissing a director or auditor

25
Q

In addition to the board deciding to circulate a written resolution, who can require them to do so?

A

Shareholders who hold at least 5% of the voting rights

26
Q

To whom must a written resolution be circulated?

A

All shareholders eligible to vote

27
Q

What two things must a written resolution contain?

A
  1. Statement informing the shareholder how to signify agreement
  2. When the resolution will lapse if not approved, typically 28 days from and including the circulation date (unless the articles provide differently)
28
Q

Whilst the % thresholds for ordinary and special resolutions are the same >50% and 75% as when voted in person, what is the crucial difference with a written resolution with regard to the pool from which those % are taken?

A

For a written resolution, it is >50% and >75% of all eligible shareholders, compared to just those present at a meeting

29
Q

To summarise, what decisions can the directors make and what decisions must the directors and shareholders consult on?

A

Directors: Day to day decisions
Both: Decisions that might adversely affect shareholders

30
Q

What is the four step process when a decision requires approval of both the directors and shareholders?

A
  1. Approval starts with board meeting and board resolution approving the matter
  2. Board then resolves to call shareholders general meeting or circulate written resolution for shareholders to approve
  3. Shareholders vote whether to pass the resolution, and it is passed if they do
  4. Board then enters into the approved transaction, resolving this if relevant
31
Q

Whilst no further action is usually required, what is one situation where directors will need to take further action, and what is that action?

A

If the resolutions have approved entering a contract to purchase property, the directors would need to resolve to appoint two directors to execute the contract

32
Q

Does the strict process have to be followed if the directors and shareholders are the same people?

A

Yes

33
Q

Unless otherwise provided, what nine things require an ordinary shareholder resolution only?

A
  1. Appoint/remove director/auditor
  2. Adopt annual accounts
  3. Declare a dividend
  4. Approve director’s decision to allot shares
  5. Approve substantial property transaction with an interested director
  6. Ratify of director’s breach of duty
  7. Enter service contract with director of more than two years
  8. Make loan to director
  9. Give payment to director for loss of office
34
Q

What is a substantial property transaction and what is the de minimis threshold?

A

Where a director buys or sells property from or to the company.

Less than £5,000 is de minimis
Must be >£100,000 or>10% net asset value (as shown in most recent statutory accounts)

35
Q

At what threshold is a transaction automatically an SPT and what is the test for figures between £5,000 and it?

A

£100,000. If between 5k and 100k, it will be an SPT if its value exceeds 10% of the company’s net assets

36
Q

Within what time period of a resolution being adopted by the board, shareholders, or both must it be filed at Companies House?

A

14 days

15 days for special resolution