Chapter 3: The Members Flashcards
What two conditions must be met for a person to become a member?
They must agree to do so.
Their name must be entered into the register of members.
How many members must a company have?
At least 1
Who is entitled to become a member of a company?
Any person or legal entity.
Why should a partnership, club or association not be accepted as a member?
Because it is not a legal entity.
When were “share warrants to bearer” abolished?
May 2015
Why share warrants to bearer abolished?
- companies like to know who holds shares
- transfer by delivery is not very secure against theft
When does a person cease to be a member?
When they cease to be registered in the register of members.
When would a member be removed from the register of members?
- voluntary share transfer (i.e. selling or giving)
- transmission of shares on death/bankruptcy/mental health
- compulsory transfer due to the articles
Which model article for a public company provides for compulsory transfer of shares?
Article 60 - if a member’s shares are not fully paid up.
Why should companies seek to understand the policies of their major shareholders?
In order to gain insight into how they are likely to vote at general meeting.
What are the 8 main principles of the stewardship code?
1 Responsibility to make considered use of votes
2 Reasons for voting against a resolution or withholding a vote should be made know to the board ahead of time
3 Ensure voting intentions are being translated into practice.
4 Eliminate unnecessary deviation in the ways they apply their criteria to the companies they invest in.
5 Be ready to enter into dialogue with companies based on the mutual understanding of objectives
6 Take an interest in the board of directors
7 Make information on company votes available to clients
8 Attend AGMs where appropriate.
What is a nominee shareholder?
Someone who is registered in the register of members of behalf of the beneficiary owner.
When must the true beneficiary of shares be revealed? (2 scenarios)
1 On request of the company (s 793 CA)
2 Under the PSC regime.
What is the usual limit on the number of joint holders of a single share?
4
Who is the “senior joint holder” when shares are jointly held?
The person with their name entered first on the list of joint holders.
What information rights do members have?
- inspect statutory books
- inspect directors service contracts
- inspect written terms and conditions of service contracts
- provided with a copy of memorandum and articles of association
- receive a copy of annual accounts at least 21 days before general meeting
- provided with copy of latest accounts
- receive notice of general meetings
- inspect minutes of general meetings
- attend general meetings and ask questions of directors
Other than information rights, what rights do members have?
1 Unfair prejudice - can petition court (s994 CA)
2 Members’ application for winding up - can apply to court
3 Derivative claims - bring action against director (s260-269 CA)
4 General meetings - attend, vote, appoint proxy
5 Members’ audit report - can require audit if holding 10% nominal value
6 Compulsory acquisition - where shareholder holds 90%
7 Share certificates - receive certificate
What duties do members have?
- disclose interest in shares of public company
- notify the company should they acquire an interest qualifying to be on the PSC register
- notify listed company when their interest reaches 3% or every subsequent 1%
- pay unpaid share amounts on winding up
- pay unpaid share amounts on request of company
Where should the register of members be kept?
The registered address or SAIL
What information must be contained in the register of members?
- name and addresses
- date became/ceased to be a member
- number, class, and amount paid up on shares
What must be added to the register of members for single-member companies.
A note that the company only has one member, and the date that the transaction took place.
Why should partnerships not be entered in the register of members?
They have no separate personality.
