Business

Question 1

Allotting shares: Step 1

Answer 1

Check the articles of association for any limit on the number of shares that can be allotted. If there are restrictions. Model articles don’t contain a restriction but one exists, pass a special resolution.

Question 2

Allotment of shares: step 2

Answer 2

Check board have authority:

1) Single class of shares, board can approve without shareholder approval.

2) More than one class of shares or proposal for more, shareholder OR needed with no of shares and export date.

Question 3

Allotting shares: step 3

Answer 3

Disapply statutory pre emption rights (if ordinary, paid fully in cash and not excluded or disapplied), by passing a shareholder special resolution (GM or WR), asking for waiver letters from all shareholders, or making an offer to existing shareholders (at least 14 days) on favourable terms.

Question 4

Allotting shares: step 4

Answer 4

1) BR (meeting or WR) requesting shareholder approval to allot, as well as disapply pre emotion rights.

2) Notice of GM or circulation of a WR

3) Allotment of shares: OR. Disapply pre emption rights: SR

4) Board resolution (meeting or WR) to report to shareholder resolutions and arrange for filings

Question 5

Allotting shares: step 5

Answer 5

Share certificates issued to allottee (within 2 months)

Update register of members (within 2 months) and PSC if affected

Shareholder resolution filed at CH within 15 days

File Form SH01 within 1 month

Question 6

What are the post completion matters after incorporating a company

Answer 6

1) hold first board meeting, formation of company, approval of costs, plus bank account, auditors etc

2) members resolutions / GM minutes - held for 10 years and kept at registered office
Board minutes and resolutions - kept for 10 years, don’t need to be held at registered office

3) registers like PsC, members, directors, secretaries etc

Question 7

Share capital requirement for being listed

Answer 7

Share capital must be at least 50k and at least 25% paid up

Question 8

Shareholder power - 5%

Answer 8

Force general meetings (ask directors, do it themselves, or ask court), right to circulate written resolutions

Question 9

Shareholder power - over 10%

Answer 9

Block consent to short notice of a general meeting

Question 10

Shareholder power - over 10%

Answer 10

Can demand vote to be held on poll instead of show of hand

Question 11

Shareholder power - over 25%

Answer 11

Able to block special resolutions

Question 12

Shareholder power - 50%

Answer 12

Able to block ordinary resolutions

Question 13

Shareholder power - over 50%

Answer 13

Able to force through ordinary resolutions

Question 14

Shareholder power - 75%

Answer 14

Able to force through special resolutions

Question 15

What does MA4 allow shareholders to do?

Answer 15

They can give directions to thee directors to take or refrain from taking an action - by special resolution

Question 16

Unfair prejudice claim - purpose and common grounds

Answer 16

Used when minority shareholder feels prejudiced against from other shareholders (e.g. failure to pay dividend or director/shareholder remuneration)

Question 17

Unfair prejudice claim - requirements for court to act

Answer 17

Actual or proposed act is causing (1) prejudice or harm to the petitioner, or (2) such prejudice is unfair - court considers seriousness of conduct and interests of members

Question 18

Unfair prejudice claim - bars to relief

Answer 18

Refusal by petitioner of a fair offer to purchase shares / misconduct or delay

Question 19

Unfair prejudice - remedies ordered by the court

Answer 19

Most likely court can order company to purchase minority shareholder shares
Can force company to pay a dividend
Refrain from carrying out act

Question 20

Derivative claim - grounds and purpose

Answer 20

Where shareholders believe the company has been wronged can bring a claim against the directors for negligence or breach of duties on behalf of the company

Question 21

Derivative claim - requirements

Answer 21

Shareholder must apply to court and the court will only grant relief if:

1) Claim must promote the success of the company (court will consider why the company has not pursued the claim itself)
2) Shareholders acting in good faith
3) Directors breach of duty has not been ratified by the company’s board or shareholders (

Question 22

Derivative claim - relief

Answer 22

Literally just to continue to pursue the claim on behalf of the company - compensation from directors / third parties paid directly to company.

Question 23

Unfair prejudice v derivative

Answer 23

Unfair prejudice easier to claim because 1) don’t need court permission, 2) ratification not a bar, and 3) causes of action are clear (notably harm to shareholder, not to the company)

Question 24

Forcing board meeting to be called by shareholders - process

Answer 24

1) Make s.303 request to the board
2) Board must call a GM within 21 days (must be held 28 days from notice)
3) If not held, can call a GM from 3 months from s.303

Question 25

Forcing board to circulate written resolution - process

Answer 25

Board must circulate 21 days from the 292 request, shareholders cannot take into own hands however it is a criminal offence for defaulting officers not to circulate