7.4 Company decision-making - procedures Flashcards
What are the requirements within a Board Meeting (BM)?
[Calling and notice]
MA 9 - any director can call a BM at any time or require a company secretary to do so. Reasonable notice must be given (not necessarily in writing unless the articles provide)
Notice contents - date, time, place and means of communication. Directors can waive the right to notice. An agenda is not a legal requirement. A new meeting can be demanded if there is a failure to give notice.
[Quorum]
Two is the quorum - MA 11.
[Voting]
Simple Majority - Voting is by show of hands or oral assent - MA7.
Chairperson has a casting vote in the event of deadlock - MA13.
[Conflict of interest]
MA14 and ss177 and 182
[Resolutions and majority]
BRs - simple majority required
What are the requirements for a board resolution at a Board Meeting (BM)?
In Person Board Resolution - Simple majority to be passed
Written Board Resolution - Unanimity to be passed
NOTE MA14: The director is not to be counted as participating in the decision-making process for quorum or voting purposes if they have a personal interest (can be disapplied). MA14 relates to conflict of interest - directors having a personal interest in a decision.
What are the requirements within a general meeting (GM)?
[Calling and notice]
Directors call a GM. Written or electronic notice may be given. Shareholders’ have the power to requisition a GM (at least 5% of share capital with voting rights needed).
14 clear days’ notice required - do not include date of service and date of meeting . Add an extra two days’ notice if serving by email or post.
Short notice may be agreed by (1) a majority in number of members (2) holding at least 90% of the company’s voting shares - both conditions have to be satisfied.
Notice contents - date, time, place and nature of business. Full text of any SR proposed and sufficient detail re ORs.
Reasonably prominent proxy notice - a notice informing the shareholder of their right to send someone to attend and vote in their stead.
[Quorum]
Quorum is two (unless a one-member company). Meeting must remain quorate throughout.
[Voting]
Show of hands - one vote per member UNLESS poll vote demanded.
Poll - one vote per share
Poll vote may be demanded by (1) the chairperson, (2) at least two voting members, (3) any member(s) holding at least 10% of the voting shares
One vote per share on a poll vote
Written Resolution at GM - not on show of hands, poll vote (one vote per share of eligible members). Not available for PLCs, not available to remove director
What is the chairperson’s role at a BM and GM?
BM: Note MA13: The chairperson will have the casting vote to resolve the deadlock. The chairperson also has the final decision if there is a dispute about whether or not a director can count in the quorum and vote
GM: Chairperson does not have a casting vote, unlike in a board meeting. Resolutions are only valid if sufficient notice of the meeting is provided and a quorum is present
What are the requirements for ordinary resolution at a GM?
Poll vote - simple majority - over 50% of members voting at the meeting in favour
On a show of hands - majority in number present
What are the requirements for special resolution at a GM?
Poll vote - 75% of votes cast by those entitled to vote in person or by proxy
On a show of hands - 75% of the number of shareholders or their proxies present
What is the procedure for changing the company’s name?
This requires Special Resolution of the shareholders and Form NM01 must be filed at Companies House
Board Meeting > General Meeting > Board Meeting
Special Resolution
What is the procedure for changing the company’s trading name?
MA 3 - Board Resolution
Update company stationery and finalise BM minutes
What is the procedure for changing the company’s registered office?
MA 3 - Board Resolution
Update company stationery and finalise BM minutes
What is the procedure for changing the company’s articles?
This requires Special Resolution of the shareholders
Board Meeting > General Meeting > Board Meeting
Special Resolution
File SR and the amended articles at Companies House
Must be in the best interests of the company as a whole
What is the procedure for appointing a chairperson?
MA 3 - Board Resolution
Update company stationery and finalise BM minutes
What is the procedure for changing the company’s accounting reference date?
MA 3 - Board Resolution
File AA01 at Companies House and finalise BM minutes
What is the procedure for appointing a director to office?
MA 17 - Either Board Resolution or Ordinary Resolution
Board Meeting or Board Meeting > General Meeting > Board Meeting
What is the procedure for appointing a director in executive capacity (paid position)?
MA 19 - Board Resolution
Form AP01 or AP02. Update 2 statutory registers - register of directors and register of directors’ residential addresses
What is the procedure for approving a director’s service contract - guaranteed fixed term of more than 2 years
MA 19 Board Resolution and Ordinary Resolution of the shareholders
Board Meeting > General Meeting > Board Meeting
Ordinary Resolution
What is a substantial property transaction (SPT)?
SPT involves the
1) acquisition / disposal of a non-cash asset where:
2) The parties involved are the company and a director OR person connected to a director (associated person)
- £5000 or less is not substantial
- More than £100,000 is substantial
- £5000 - £100,000: substantial if it exceeds 10% of the company’s net asset value or paid up share capital if no accounts in the first year of trading
How can a substantial property transaction (SPT) be approved?
Board Meeting > General Meeting > Board Meeting
Ordinary Resolution
Seal / execute necessary documents, meeting minutes, SDLT and registration at HM Land Registry if real property purchase
What is required to make a loan to a director exceeding £10,000?
Memorandum of proposed terms required
Board Meeting > General Meeting > Board Meeting
Ordinary Resolution
What are the consequences of failing to obtain permission to make a director loan > £10,000?
Failure to get loan permission - loan is voidable, directors liable to account for any gain made from the loan and indemnify the company’s loss
What is required to make a payment to a director for loss of office exceeding £200?
Board Meeting > General Meeting > Board Meeting
Ordinary Resolution
What is the procedure for removing a director from office?
1) Check service contract
2) Check articles of association - is there an effective Bushell v Faith clause? Shareholders can remove the weighted voting rights clause by passing a special resolution to amend the articles
Special Resolution at GM (removal of Bushell v Faith clause - amending articles)
3) Check shareholders’ agreement
4) SPECIAL NOTICE must be given to the company (28 days before the meeting)
5) Minimum of 14 clear days’ notice of meeting required
6) Rights of directors subject to resolution should be met - they have a right to make submissions at the GM
Ordinary Resolution at GM
7) TM1 or TM02 to be filed with Companies House. Update register of directors and register of directors’ residential addresses. Meeting minutes
What is the procedure for appointment / removal of a company secretary?
MA 3 - Board Resolution
APO03 or AP04 if appointing, TM02 if removing. Update register of secretaries.
Can shareholders request a copy of the register of members?
Yes. Shareholders have a right to receive this copy. To refuse this request, the company must give evidence that the request is not made for a proper purpose
Can shareholders ratify a breach of duty by directors?
Shareholders can condone a director’s breach of duty by passing an ordinary resolution, ratifying the director’s conduct
Ordinary Resolution
