9. Company meetings and decision making

Question 1

How companies make decisions?

Answer 1

Decisions can be made by two methods:

1. Decision in plc must be made via resolutions at a meeting, unless the unanimous assent rule is used (s.281(2) and (4). In large co, the unanimous assent is not practical, so decisions are taken at the AGM
2. Decision in private companies can be made by resolution at a meeting, by a written resolution, or by unanimous assent. Most private companies have small number of members, so holding meetings is pointless. (especially where members and directors are the same persons). So most private companies will make decisions by written resolution or unanimous assent.

Question 2

What is the difference in the ways that votes are calculated at a meeting and by written resolution procedure?

Answer 2

• Where the resolutions are tabled at a meeting, the requisite majority is calculated based on the votes cast by those eligible to vote (on those who actually vote).
• Where a written resolution is used, requisite majority is calculated based on the voting rights of the total number of members eligible to vote, not just those who actually do vote.

Question 3

What is unanimous assent rule?

Answer 3

The unanimous assent rule provides that if all members agree on a matter, the decision will be validly made, even if no meeting takes place and no resolution is passed.

Question 4

What types of decisions cannot be taken by unanimous assent?

Answer 4

• Where the statute requires that a decision be taken at a meeting
• When the members had appropriate or full knowledge of the matter
• Where the decision could not have been made by resolution

Question 5

What are the tree limitations on members ability to vote?

Answer 5

• Shares have no voting rights
• AA place restrictions on members ability to vote
• If limited by statute (director cannot vote to ratify his negligence or breach of duty)

Question 6

Identify three possible limitations on members’ ability to vote

Answer 6

1. Share have NO voting rights
2. Restrictions in the AA
3. Restricted by statute (eg.s.293 - to ratify his negligence or breach of duty)

Question 7

What are the two methods of voting on a resolution and how do they differ?

Answer 7

1. Show of hands (one vote per member)

2. Poll vote - one vote per share (if there is capital)

Question 8

What is proxy?

Answer 8

Member is entitled to appoint another person to exercise his rights

Question 9

What is corporate representative?

Answer 9

Authorised by resolution of the directors to represent a company at a meeting of another company

Question 10

What types of co must hold AGM?

Answer 10

Private - if traded

Public - every year

Question 11

Under MA, when can a chair adjourn a meeting of the company?

Answer 11

1. If a meeting is not quorate within half an hour, or if ceases to be quorate at some point during the meeting
2. If the meeting consents to adjournment
3. if it become necessary to protect safety of any person attending, or to ensure that the meeting is conducted in an orderly manner
4. if directed by general meeting

Question 12

What records of meetings and resolutions must the co keep and for how long?

Answer 12

• All resolutions passed
• Minutes
• Details of decisions taken by sole member

Question 13

Who can ask to include matters into business of the meeting?

Answer 13

In plc, 100 members or members with 5% of the voting rights may request the co to include in the business of the company any matter which is not frivolous or vexatious, companies are required to circulate notice of any such matter, either in the same way as it gives notice of the AGM or as soon as reasonably practicable afterwards (s. 340A).
If an AGM notice is sent out more than six weeks before the meeting it must include a statement about the right of members to requisition a resolution or other matter at the meeting (s. 337).

Question 14

Who can requisition a General Meeting?

Answer 14

A GM can be called by:

• Directors
• members representing 5% of the company capital
• if not share capital, 5% of the voting rights
• the court

If the directors fail to call a general meeting within 21 days of such a request, or to hold the meeting within 28 days of the request, the members who made the request may call a meeting and hold it within three months of the request, in which event their reasonable expenses are reimbursable by the company (s. 305).

Question 15

Class meetings:

Answer 15

Rules in the Act applicable to general meetings apply ‘with necessary modifications’ in relation to class meetings, subject to these exceptions:
the right of members to require directors to call a meeting (ss. 303–305) does not apply to class meetings; 
and the power of the court under s. 306 to order a meeting does not apply to class meetings.
Special quorum rules apply to such meetings, superseding the quorum of two set out in s. 318, and any holder of the class of shares in question may demand a poll (see section 3.2 below) at such a meeting, displacing the rule for general meetings in s. 321.
The quorum for class meetings in connection with variation of class rights is two persons present holding at least one-third in nominal value of the issued shares of the class in question.
For an adjourned meeting, the quorum is reduced to one person present holding shares of the class in question (s. 334(4)).