Chapter 4 - Resolutions and Minutes

Question 1

What considerations would you need to take into account when drafting a resolution for payment of a final dividend?

Answer 1

a) How much dividend to be paid in respect of each share
b) To whom the dividend should be paid (especially if the registered ownership of shares changes between declaration and payment of dividend.
c) When the dividend should be paid
d) In respect of what financial year the dividend is paid

That a first and final dividend in respect of the year ended 30 June 2013 of 5p per £1 ordinary share be declared payable on 30 November 2013 to holders of the said shares on the register at the close of business on 19 September 2013.

Question 2

What are the key points to bear in mind when drafting a resolution?

Answer 2

1) Keep it simple - if the resolution doesnt need to know about eg retirement by rotation dont include it just say elected.
2) A resolution may refer to or alter an existing document eg a copy of which has been initialled by the chairman
3) Resolved that

Question 3

What types of resolution are there?

Answer 3

Ordinary and Special

Ordinary resoloution - this is the standard resoloution which should be used unless the law or company’s articles provide otherwise - approved by a simple majority

Special resolution - described as such in the notice, the full text of the resoloution is given in any notice, has to be carried by a majority of 75%.
A special resoloution can be passed at a general meeting or in the case of a private company by written resoloution

Question 4

Explain ordinary resoloutions?

Answer 4

1) passed by simple majority
2) Where it is not specified what type of resoloution is required you would use an ordinary resoloution
3) Where the act says a special resoloution is required it cannot be approved by ordinary resoloution. Where the act only requires an ordinary resoloution it can be passed as a special resoloution (ie by a higher majority). However where the act specifically states something may be done by ordinary resoloution the company articles cannot require it to be done by higher majority. - the courts have definitely ruled that a compnay’s articles may not do this in the case of a resoloution to remove a direcector.
4) The criterea for passing a resoloution is as follows
a) on a written resoloution - passed by a majority of the total voting rights of eligible members
b) on a show of hands by simple majority of those entitled to vote
c) On a poll, by members representing a simple majority of the total voting rights of members who vote in person, by proxy or in advance on the resolution.
5) On written resoloution faiture to vote is a vote against. Show of hands and poll - faiilure is irnored and not couted.
6) Not necessary to deliver signed copy of ordinary resoloution to companies register
7) Member has statutory right to inspect general meeting minutes

Question 5

What notice needs to be given for an ordinary resolution?

Answer 5

Unless special notice applies the period is determined by the nature of the meeting

a) If AGM (of a PLC) 21 days notice to convene the AGM
b) General Meeting - 14 days notice of meeting

Question 6

When does special notice of an ordinary resoloution need to be given?

Answer 6

Special notice is given ‘to’ the company and not ‘by’ it. The Company must then notify certain people who have an interest in the resoloution that it is going to be proposed.

This requirement to notify people is important as they have a right to speak at the meeting.

a) To remove a director from office
b) to remove an auditor before the expiration of his term of office

Question 7

What is the procedure for special notice?

Answer 7

a) Notice of intention to propose a resolution must be given 28 days before the meeting
b) On receipt of special notice the company must immediately send a copy to relevant interested parties
c) Where practicabale the company must give its members notice of the resolution in the same manner it gives notice of the meeting. Where not practicable the company must give at least 14 days notice by advertisement in a newspaper or any other manner allowed by the company’s articles
d) If special notice has been recieved and the company then calls a meeting for a date less than 28 days from its receipt it will not have been given in time. If is deemed properly given if it is to prevent directors from frustrating a special notice resoloution by advancing the date of the meeting to exclude it.

Question 8

In case of a resoloution to remove a director or auditor what must you do on receipt of special notice?

Answer 8

a) Send a copy of it to the Director or Auditor
b) The individual concerned is then entitled to require the company to circulate a statement putting his case to the members
c) The individual is also entitled to address the meeting.

In the notice the company sends out the company must advise if it has other relevant information such as the above.

Question 9

When might members be able to request business be included in a meeting?

Answer 9

Members of a public company - 5% of voting rights or 100 in number of at least £100 each. May require the company to include a resoloution in the business of the next AGM and to give appropriate notice.
Members of a traded company - at least 5% or 100 people with at least £100 of shares - may require the company to include ANY matter other than a proposed resoloution which may properly be included in the business and to give notice of it.

If request made before end of the financial year when meeting held the company pay, otherwise they pay.

Members of both public and private companies may require the company to circulate a statement of not more than 1000 words.

If members wish to issue a circular at their own expecnse can a) obtain a list of members, b) print their statement c) distribute it without letting the directors have advance notice.

Members of private companies also have the right to circulate written resolutions and to have statements circulated with written resoloutions.

Question 10

When were extroadinary resoloutions abolished?

Answer 10

The 2006 act aboloished the requirement to give 21 days notice. The act does provide though that any reference to extraordinary resoloutions in existing articles will continue to be effective and should be read in line with the 1985 act.

A signed copy of an extroadinary resoloution must be delivered to the Companies Registry withn 15 days of its passing.

Question 11

Explain the principles relating to notices of special resoloutions?

Answer 11

A resolution is special when it is described as such in the notice of the meeting, and may only be carried
by a three-quarters majority of votes cast at a meeting: s 283.
Special resolutions are required for most major decisions affecting the structure of the company. These
include alterations of the articles, reduction of capital, various re-registrations and the change of a
company’s name.
The notice of the meeting must also describe the resolution to be passed as a special resolution, and it is
general practice to reproduce the full text of the resolution in order to avoid disputes as to whether
sufficient information on the nature of the business to be transacted has been given.

Question 12

When were effective resolutions abolished?

Answer 12

Under the 2006 act. Under the 1985 act they were used to opt out of AGMs (but requirements for private companies to have AGMs have been abolished now)

Question 13

Can you amend resolutions?

Answer 13

Yes you can amend ordinary resolutions within the scope of the notice.

There can be no substantial amendment to special resolutions as the text of these is laid out in the notice.

Moorgate mercantile holdings 1980, amended the resolution by a small figure. The court said that
A) admin errors can be corrected
B) the wording can be improved
C) no amendment of substance was possible

Articles may require members to give advance notice of any proposed amendments and protect the rulings of the chairman on validity of amendments

Question 14

When must resolutions be registered and what are the main resolutions which need to be registered?

Answer 14

Within 15 days of its passing and must be certified by the secretary director or chairman.

If the company has it’s own articles (so has not adopted 2006 or table a, a copy of all resolutions requiring registration must be attached to any copy of the articles issued.

Main resolutions registered are
A) special resolutions
B) resolutions agreed to by all members which would otherwise have required special resolutions
C) resolutions agreed to by all members of a class which would otherwise have required a majority, or all resolutions which are binding to that class whether or not agreed to by all members
D) a change of company name to include the word limited if the Secretary of State directs the change
E) an ordinary resolution authorising directors to allot shares
F) an ordinary resolution authorising the transfer of a public company to a non cash asset period
G) winding up of the insolvency act

Question 15

When does unanimous agreement come into play?

Answer 15

If every member of a company agrees to something it will not be invalidated by an incorrectly called meeting.

Express engineering works - informal but unanimous agreement or irregular generalbut unanimous are still valid.

Parker and cooper ltd v reading 1926 - a debenture had been issued and although there was no meeting all the members had agreed to it on different occasions. As the debenture had been issued with Te absent of every shareholder it was declared valid.

Hoarsely and weight 1981 a pension was purchased for a retiring director and although no meeting it was agreed as it had approval of all shareholders.

Best practice to have a meeting.

Question 16

Explain written resolutions?

Answer 16

These can be used in private companies and need to be agreed by either a simple majority or 75 percent dependent on the resolution.

Directors must circulate the resolution to all members entitled to vote. The members entitled to vote are those entitled when the resolution was circulated.

To be valid it must be authenticated by members within 28 days of circulation. Should be sent with a circular and instructions. A copy must also be sent to the auditors.

Written resolutions may not be used to remove directors.

A record of written resolutions should be kept for 10 years. If it would have required filing at a general meeting eg special resolution, it must be sent to companies house.

This procedure is allowed regardless of the articles.

Company number
Companies act 2006
Special resolution of ANC limited
On the day of 2008, the following special resolution was duly passed as a written resolution of thr members of the company pursuant to part 13 of the companies act 2006.
That the name be changed to AMD LIMITED.
SIGNED DATE SECREATRY

Question 17

Is every company required to keep minutes?

Answer 17

Yes of its proceedings and general meetings. Minutes of meetings on or after 1 October 2007 need only be retained for ten years. Minutes before this date should be kept permanently.

Question 18

What should be contained in minutes?

Answer 18

A) Names of those attending, apologies, date and meeting title
B) minutes if the resolutions
C) possibly minutes of narration as sometimes helpful to record in context

If a person expressly asks that his abstention from voting is recorded you should do this.

Concise, impersonal, past tense, clearly laid out.

Question 19

How should minutes be stored?

Answer 19

In a bound book or folder. Pages numbered. Lock and key when not in use or electronic form is also allowed as long as capable of being reproduced.

Question 20

When may minutes be used as evidence and when may a member challenge them?

Answer 20

Minutes should be conclusive evidence, john mottram ltd 1940

The act provides that the declaration of the chairman is conclusive evidence and should be recorded in the minutes.

A member can challenge the minutes if he can show
A) a false record fraudulently prepared
B) the chairmans declaration is incorrect eg Caratal (new) mines ltd 1902 where the chairman announced the vote and incorrectly referred to proxies and it was found that the minutes were invalid as the chairmans announcement was invalid.

Question 21

Are members allowed to see minutes?

Answer 21

Yes there is a statutory right to
A) inspect the minutes of general meetings
B) be supplied with a copy within 14 days of requesting.

The minutes must be kept at their registered office or other place (known as SAIL) notified to the registrar.

Members are only allowed to see general meetings not board meetings.

Question 22

What minute rules apply to single member companies?

Answer 22

If a sole member takes a decision that could have been taken at a general meeting the member shall provide the company
with a written record of it.
Filing requirements still apply.
Can be done by written resolution but again should be recorded.
Written resolutions cannot be used to remove a director or auditor. The written record procedure of all members agreeing though would probably work in this case.