Company Decision-Making

Question 1

Under MA 9, what must a director do before calling a board meeting?

Answer 1

Give reasonable notice to the other directors, including the time, date and place of the meeting.

Question 2

Rule (MA 11) A quorum of … must be present at all times during a board meeting.

Rule (MA 7): Board resolutions are passed by…

Answer 2

Two directors
Simple majority.

Question 3

Rule (MA 14) A director may not count in the quorum or vote if a proposed decision of the board: (two bullets)

Answer 3

• relates to an actual or proposed transaction or arrangement with the company,
• in which a director is interested.

Question 4

Rule (s 177 CA 2006): Where a director has a personal interest in a proposed transaction or arrangement with the company, what must they do?

Answer 4

Declare the nature and extent of this interest to the board.

Question 5

A director does not need to declare their personal interest in a proposed transaction or arrangement with the company if:

Answer 5

1. it cannot reasonably be regarded as likely to give rise to a conflict of interest;
2. the other directors are aware of it; or
3. it concerns terms of the director’s service contract that have been or are to be considered by a meeting of the directors.

Question 6

What is the key difference between the obligation to declare a personal interest and the prohibition on counting in the quorum and voting when the director has a personal interest in the subject of the resolution?

Answer 6

The s.177 obligation to declare a personal interest cannot be disapplied whereas the MA 14 prohibition on counting the quorum can be disapplied.

Question 7

Shareholders’ Resolutions: General Meetings

What is the procedure for general meetings?

Answer 7

1. The board calls the general meeting by passing a board resolution.
2. The board gives at least 14 clear days’ notice to all shareholders.
3. The meeting is held.

Notice is based on when the notice is deemed to be received.

Complicating factor - post/email: Notice is deemed to be received 48 hours after being posted/emailed.

Question 8

Shareholders’ Resolutions: General Meetings

What should the notice of the general meeting contain?

Answer 8

• Time, date, place of meeting
• Nature of business
• If a special resolution is proposed, the exact wording of it
• Each shareholder’s right to appoint a proxy.

Question 9

Shareholders’ Resolutions: General Meetings

When can a general meeting be held on short notice?

Note: quorum is two, subject to the articles (or one, where there is only one shareholder).

Answer 9

If consent is given by a majority of shareholders holding a total of 90% or more of the voting shares.

95% for a public company.

Question 10

Shareholders’ Resolutions: General Meetings

How do shareholders vote at a general meeting?

Can a shareholder count in the quorum or vote if they have a personal interest in the matter?

Answer 10

• By hand or;
• By poll vote if validly demanded.

Yes. But his vote is ineffective in relation to:
- Buyback of his shares.
- An ordinary resolution ratifying his breach of duty as a director.

Question 11

Shareholders’ Resolutions: General Meetings

What is the effect of a poll vote and when can it be demanded?

Who can demand a poll vote under MA 44?

Answer 11

• one vote per share owned.
• Can be demanded at any time, including after the shareholders have voted on a show of hands.

Who can demand a poll vote:
1. The chair
2. The directors
3. Two or more members having the right to vote on the resolution
4. Members with at least 10% of the total voting rights of all shareholders having the right to vote.on the resolution.

NOTE: the poll vote demand is the only one requiring 10% of total voting rights. Others below are 5% (and slightly differ in requirements - see later).

Question 12

Shareholders’ Resolutions: Written Resolutions

What is the procedure for a written resolution to be given?

Answer 12

1. The directors send a copy of the resolution to every eligible shareholder simultaneously.
2. The resolution must include the method of signifying agreement and the lapse date.

The copy can be in hard copy or electronic.

Question 13

Shareholders’ Resolutions: Written Resolutions

Who is an eligible member?
What is the lapse date?

Answer 13

A shareholder entitled to vote at the date of circulation.
28 days after circulation, regardless of the method of circulating.

Articles can change lapse date.

Note: the lapse date differs from notice for general meetings in that it is based upon the date of circulation, not the date that it is deemed to be received.

Question 14

Shareholders’ Resolutions: Written Resolutions

How are written resolutions passed?

Answer 14

Written resolutions are passed by simple majority of all eligible members.

Each shareholder has one vote per share that they own.

Question 15

Shareholder’s power to request a written resolution

What is the process for the company being required to circulate a written resolution by request of the shareholders?

What else can the shareholders require?

Provide further advice in relation to this power.

Answer 15

(1) Shareholders (or a single shareholder) with at least 5% of the voting rights require one to be circulated.

(2) The company must circulate a copy of the resolution within 21 days of receiving the request.

Circulation of a statement of up to 1000 words.

Further advice

• The articles may reduce this percentage below 5% but cannot increase it.
• The shareholders requesting the circulation must pay any expenses.

Question 16

Shareholder’s power to requisition a general meeting

When can the company be required to hold a general meeting by requisition of the shareholders?

Upon receiving the requisition, what is the procedure?

Answer 16

When shareholders with 5% of the company’s paid-up share capital carrying the right to vote make a requisition.

Procedure

1. The directors must give notice of the meeting within 21 days.
2. The meeting must then take place within 28 days of the notice.