BLP 3 - Company decision making Flashcards
Changing name and articles
Special resolution (ss21 and 77 CA 2006)
Directors
Board meetings
Board resolution (result of meeting)
MA5 - directors delegate power as they see fit.
Must give notice to other directors
Notice must be reasonable (will depend on facts)
May not be in writing but give time date and place.
Quorum - quourum of two directors present at all board meetings (MA 11)
May not count in quorum or vote if concerned with actual or proposed transaction in which the director is interested. (MA 14).
Director must declare nature and extent if personal interest (s 177 CA 2006).
UNLESS
-cannot be regarded as likely to give rise to conflict of interest
-other directors are already aware of it
-concerns terms of a service contract that have been or are being considered by a meeting of the directors.
MA7 board meeting passed by simple majority. Chair can pass vote in favour.
Written resolution unanimously in favour can also be passed.
Shareholders
Ordinary - 50%
Special - 75%
By general meeting or written resolution
General meeting - Called by directors by passing board resolution. Public must hold meeting once a year.
Directors must give notice to every shareholder, other director and auditor.
-Time,date and place
- General nature of meeting
-If special resolution exact wording
-Each shareholder right to appoint a proxy.
14 clear days minimum (days between).
Quorum of two unless only one shareholder.
General meeting show of hands, each shareholder has one vote (MA42).
May not vote if personal interest in;
-resolution to buy back shares
-ordinary resolution to ratify breach where director also a shareholder.
Poll vote - one vote for each share owned.
May be demanded by
-chair of meeting
-the directors
-two or more persons having the right to vote on resolution
-a person or person representing not less than one tenth of the total eligible voting rights.
In meeting, even after show of hands. Will override.
Short notice
General meeting on short notice.
-Hold 90% or more of the companys voting shares must consent. 95% for PLCs.
Written resolutions
Private companies only
Circulated to each eligible member.
-Lapse date and how to signify agreement.
Lapse date 28 days from circulation.
Passed when required majority have signified agreement.
One vote for each share they own.
Shareholder requests
- 5% or more of voting rights entitled to require written resolution. Can be reduced not increased.
Can ask for subject matter up to 1000 words. Must circulate a copy within 21 days. Shareholder who requested must pay expense.
Can require a general meeting (s303 CA 2006). At least 5% of paid-up capital shareholders. Must state nature of request.
Directors must call within 21 days
After that have 28 days to call general meeting
Board must call general meeting within 21 and held no later than 28 days from notice of general meeting
Post-decision requirements
If not fine for all company and officers. Criminal offence.
Must file with Companies House;
Special resolutions
Internal records;
Register of members
Single alternative inspection location;
SAIL address (form AD02), movement of records (AD03), (AD04) from registered back to SAIL address).
Board minutes and minutes of general meeting
Record of any written resolution
FOR TEN YEARS*
Annual responsibilities
Adequate accounting records
(Offence under s387 CA 2006) Must be true and fair view.
directors report for each financial year.
UNLESS
Small company-
Balance sheet of no more than £5.1 million, turnover or no more than £10.2 million) and no more than 50 employees in a financial year.
Microentity - Balance sheet of no more than £316,000, no more than £632,000 and no more than ten employees.
Time limit - nine months from end of accounting reference period for private company. Six months from end for PLC.
Newly incorp - three months after end of accounting period.
Every company must file confirmation statement (Form CS01) within 14 days from confirmation statement. Which is anniversay of incorporation.
Company officers
Secretary - public must have one.
Writes up minutes and meetings.
Usually have authority but not entering trading contracts.
Can be removed by board resolution.
Requirements
– notify registrar on AP03 (human) or AP04 (corporate) within 14 days of appointment.
– must keep registrar of secretaries
–resign must notify in 14 days on form TM02.
–notify within 14 days of any changes in particular (CH03 human) (CH04 corporate)
Auditors required (unless small or dormant).
Auditor must be qualified.
Directors usually appoint but after shareholders by ordinary.
Automatically renewed each year unless appointed by director or expressly said in articles.
Liability
Not to shareholders
–s507 - knowingly or recklessly including misleading material in report
–Omitting certain statements from report which are requirred.
Can be removed by ordinary at any time.
Special notice required.
Can resign by writing to registered office.
Resigned or removed must deliver statement with circumstances why.
Shareholders
- Sign memorandum are automatically first shareholders of company
Ways to acquire shares (remember private not on stock/available to public);
-buying of existing
-receiving as gift
-by way of transmission when shareholder dies or becomes bankrupt.
Registers
Register of members - at companies house or central register. All shareholders have right to have their name. Must register transfer as soon as practiable (longest two months).
If one member statement to that effect.
Criminal offence if inaccurate.
Must be inspectable to shareholders at registered office or SAIL.
Failure is a criminal offence
Share certificates - issued within two months of transfer.
PSC - persons with significant control. Not just INO1.
More than 25% of shares or 25% voting right.
Must keep register
Can apply to be kept private (no name etc..).
-PSC01 - first time appearance
-PSC02 - relevant legal entity appears
-PSC04 - details change
-PSC07 - cease to have control
Shareholders rights
Breach of contract if not abiding by terms of constitution.
When rights infringed (voting rights and rights to share in profits)
Can be against other shareholder.
Shareholder agreements
Can have
-restrciction on transferring shares.
Bushell v Faith clauses - weighted voting rights when resolution to remove that shareholder from office as director
-non-compere clause.
Shareholder rights
-Right to apply to court for general meeting
-Right to apply to court for company to be wound up where just and equitable.
-Right to remove director by ordinary resolution
-Remove auditor by ordinary
-Inspect without charge; minutes and resolutions, statutory registers, directors service contracts and indemnities, contracts relating to company own purchase of its share, right to receive copy of annual accounts and reports.
-Right to seek injunction to prevent unconstitutional behaviour.
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Types of shareholders
Subsidiary of holding company if;
other company holds majority of voting rights
other company is a member and can appoint or remove majority of directors
member and it contros alone pursuant to agreement with other members majority of voting rights
it is a subsidiary of a company that is itself a subsidiary of that company.
Wholly-owned
-If has no members excpet that other and that other wholly-owned subsidary of persons acting on behalf of that other or its wholly-owned subsidiaries.
Single-member companies
-One individual is both sole director and sole shareholder
-must have statement to this effect on register of members.
-Must state if increased.
Joint shareholders-
shares held by two or more individuals jointly. Registar need to record both names. Breach of any section mentioned is an offence.
Types of share
Ordinary - right to vote, may receive dividends
Preference - Profits left over receive dividends
Cumulative - missed dividends from previous financial years
Participating - receive profits or assets.
