COMPANIES—JOINT DECISION MAKING Flashcards
SHAREHOLDER MEETINGS
A public company is required by statute to hold an annual
general shareholders’ meeting, but a private company is under no such obligation. Companies (both private and public)
may also hold general shareholders’ meetings as and when required
Who Can Call a Meeting?
1.director
It is usually the directors who call a meeting (under statute).
2.shareholder
3.resigning auditor
4.court
shareholder call the meeting
- Shareholders who hold at least 5% of the paid-up voting capital can require the directors to call a meeting.
- On receipt ofsuch a request, the directors must call the meeting within 21days, and it must actually be held within 28 days.
- If the directors fail to call the meeting, the shareholders who requested it(or any shareholders holding at least** 50%** of the voting rightsof the company) can call the meeting themselves. If that happens, the shareholder who calls the meeting is entitled to be
reimbursed by the company for reasonable expenses.
Notice of a general shareholders’ meeting m
- Notice of a general shareholders’ meeting must be given to all
the shareholders and directors, the personal representatives
of any deceased shareholders, and the trustee in bankruptcy of any bankrupt shareholders and to the auditor, if one has
been appointed. - Notice can be given in writing or electronically, by email or via a website.
- If a shareholder wishes to call
a meeting to consider a resolution to remove a director, the
shareholder must give the company notice at least 28 clear
days prior to the meeting.
content of notice
1.mThe notice must include the company name, the time, date,
and place of the meeting,
2. the general nature of the business to be carried on at the meeting,
3. a statement of the right to
appoint a proxy to attend the meeting, and
4. the full text of any special resolution
timiing of notice
Notice must be given at least 14 clear days before the meet-
ing unless the articles provide for longer notice. ‘Clear days’ means that the date the notice is given and the date of the
meeting are not counted. Also, if the notice is being commu-
nicated by a method other than by hand delivery, an addition-al 48 hours must be included for deemed service.
Exam Tip
To save you the trouble of counting days on a calendar,
you can calculate the latest date for which notice can be given as: meeting date minus 15 for hand delivery and
meeting date minus 17 for posted delivery. This formula,
of course, works in the other direction too: notice date
plus 15 (17 if notice is to be posted) is the earliest date a
meeting can be held.
Compare: the timing of Annual Meeting of a Public Limited Company
Public limited companies (but not private limited com-
panies) are required to hold an annual general meeting.
An annual general meeting requires 21 clear days’ notice
rather than the 14 clear days required for other the gener-
al meetings.
Insuffcient Notice
If the notice is insufcient, a member who is unhappy with ac-tion taken at a meeting can seek to have the action declared invalid.
Short Notice
A meeting may be held on shorter notice if agreed by a ma-
jority in number of the shareholders who hold 90% (95% for
non-traded public companies) of the shares. However, short
notice cannot be used in those circumstances where docu-
ments must be left at the registered ofce for 15 days prior to the general shareholders’ meeting,
Quorum
- A valid vote cannot be taken at a meeting of the sharehold-
ers unless a quorum is present. Unless the company’s arti-
cles provide otherwise, - the quorum required for a sharehold-er meeting is two (unless the company is a single member company) members (or proxies of two members,
- but a single shareholder who attends a general shareholders’ meeting and who is also a proxy for another shareholder cannot by
himself be quorate).
Approval of Resolutions at a Meeting
Resolutions may be approved by a vote of the shareholders
at the shareholder’s meeting. There are two types of resolu-
tion: ordinary and special.
1. Approval of an ordinary resolution requires the afrma-
tive vote of a simple majority (more than** 50%**) of the
members at the meeting
2. Approval of a special resolution requires the afrmative
vote of 75% or more of the members at the meeting.
Special resolutions
the Companies Act 2006 requires a special resolution for
1. any alteration to the articles of association of the compa-
ny,
2. a reduction in the company’s share capital,
3. the winding up of the company, and to change the company’s name.
4. the company’s articles may provide for further matters that are required to be voted on by special resolution.
5. All special resolutions must be fled at Companies House within 15 days.
Method of Voting
- The normal method of voting at a company meeting is by a
show of hands—one vote per shareholder who is present
or by a proxy whom the shareholder has sent in their place. - However, it is open to fve shareholders or more, or share-
holders with at least 10% of the voting rights or 10% of the
paid-up capital of the company to demand a poll instead. - poll changes the voting from one vote per shareholder to
one vote per share.
Approval of Resolutions byWritten
Resolution
- Written resolutions are available to private companies only
and are a way of passing resolutions without having to have
a shareholders’ meeting. - A written resolution can be used for either ordinary or
special resolutions - a written resolution cannot be used to dismiss a director or auditor;
- Normally, the board of directors decide whether to cir-
culate a written resolution; however, shareholders who
hold at least 5% of the total voting rights can require the
directors to do so;
5.The written resolution must be circulated to all members
eligible to vote; - The written resolution must contain a statement in-
forming the shareholder how to signify agreement and
when the resolution will lapse, typically 28 days from
and including the circulation date unless the articles say
something diferent; and
7.Any documentation which must be left at the company’s
registered ofce for 15 days prior to a general sharehold-
ers’ meeting, or available at the general shareholders’
meeting, must be circulated with the resolution. - although the percentage of votes needed to pass a resolution is the same used in general shareholders’ meet-
ings (more than 50% for ordinary resolutions and 75% or
more for special resolutions), here the percentage is based
on all the shareholders entitled to vote whilst at a meeting
the percentage is based on shareholders who attend in
person or by proxy). And it is based on one vote per share as opposed to one vote per shareholder.
If a decision requires involvement of both the directors and
the members (for example, a special resolution to change
the company’s name),
- approval will start with a board meet-ing and resolution approving the matter.
- The board will also approve a resolution to call a general shareholders’ meeting or circulate a written resolution for the members to resolve to approve the matter.
- The shareholders must then vote whether to pass the resolution, and if they do, the resolution is passed.
- Often, there is no requirement for a further board meeting, However, sometimes another resolution will
be necessary to deal with administration of the decision. For example, if the resolutions approved entering a contract to
purchase a new factory building, after the shareholders ap-
prove, the directors would need to call a meeting and adopt a resolution to appoint two directors to execute the contract.
