Company Decision-making Flashcards
What are the 2 decisions that shareholders make?
Decisions which the shareholders ALONE make (changing articles of association, the name of the company)
Decisions which give the directors PERMISSIOn to enter into certain contracts. (Buying property from director, etc)
What is MA 9?
When a director calls a board meeting, they must give notice to the other directors
What are the requirements for notice of board meetings?
Notice must be reasonable, which is dependent on the facts.
No need for notice to be in writing, but it must include the time, date, and place of meeting.
What is rule MA 11
A quorum of 2 directors must be present at all times during a board meeting
Why must there be a quorum of 2 people at a board meeting?
To reduce risk of one director turning up and making rash or fraudulent decisions without another director present.
What is Rule MA 14?
A director may NOT count int eh quorum or vote if a proposed decision of the board is:
- concerned with an action or proposed transaction or arrangement
- in which a director is interested
What is s 177 CA 2006?
Where a director has a personal interest in a proposed transaction or arrangement with the company, they MUST DECLARE the nature and extent of this interest to the board
What are the exceptions of s 177?
177(6):
A director does not need to declare their interest in a proposed transaction or arrangement with the company:
If it cannot reasonably be regraded as likely to give rise
The other directors are already aware of it, or,
It concerns terms of a service contract that have been, or are to be, considered by a meeting of the directors.
What is Rule MA 7?
Board resolutions are passed by a simple majority, which means that OVER HALF of those present must vote in favour in order for the board resolution to be passed
How is voting at a board meeting carried out?
By a show of hands, and each director has 1 vote.
What is MA 8?
It is possible to pass a board meeting in the form of a resolution in writing or any other method which shows that all eligible directors have indicated their view.
What is s 282 CA 2006?
For an ordinary resolution to be passed in a general meeting, over half of the votes cast at the shareholder general meeting must be in favour
What is rule 283 CA 2006?
For a special resolution to be passed, 75% or more of votes cast at a shareholders general meeting must be in favour of the resolution
What are the 2 ways in whcih a shareholders resolution can be passed?
General meeting
Written resolution
How is a general meeting used to pass a shareholders resolution?
They are called by the board of directors when passing a board resolution.
If they want the shareholders to pass a shareholder resolution.
OR< shareholders can request.
What is the content of the NOTICE of a general meeting?
Directors must give notice to every shareholder and every director, and to the auditor if there is one
Notice must set out:
- time, date, place
- general nature of business
- If special resolution - exact words
- each shareholders right to appoint a proxy
What is rule 307 and 360 CA?
The minimum notice requirement for a general meeting is 14 CLEAR DAYS
What is s 318 CA?
The quorum of a general meeting is generally 2
Unless only one shareholder - then it is one
When are shareholders votes NOT interested if they have an interest?
If it is for a reoslution to buy back some or all of a shareholder shares.
Ratification of the directors duty - if said person is the director in question.
What are poll votes?
Where the shareholders vote in a general meeting on the basis of 1 vote for each share they own, instead of one vote per person.
Who can a poll vote be demanded?
Chair of meeting
Directors
2 or more persons having the right to vote on the resolution
A person or persons, resenting not less than 10% of the total voting rights of all shareholders.
When can a poll vote be used?
Can be demanded before a general meeting, during, or after the show of hands.
What is Rule s 307(5)-(6)
General meeting can be validly held on short notice if:
- a majority in number of the company’s shareholders
- who between them, hold 90% or more of the companys Voting shares must consent
What are written resolutions?
Pass a resolution by way of written resolution, for shareholder decisions.
Alternative of a general meeting. Board will hand out, post or email a written reoslution.
What is set out in the written resolution?
Will set out the text of the ordinary and or special resolutions which the board is proposing, and teh shareholder has to sign and return it IF THEY WANT TO VOTE IN FAVOUR
What is s 291(2) CA
A written reoslution must be circulated to every eligible member.
Eligible means the shareholders who are entitled to vote on the resolution as at the circulation date of the resolution
What information must be included on the written resolution? S 291(4)
How to signify agreement
The deadline for returning it (lapse date)
What is the lapse date for written resolutions (unless stated otherwise)
28 days from circulation
What is rule s 296 CA
Written resolutions are passed when the required majority of eligible members have signified agreement to the resolution
What is s 281(3) of CA?
If a section states that a resolution of members is required, but does not state which type, then it is ordinary resolution. UNLESS the company’s articles require a higher majority
What is rule s 292 CA?
A shareholder or shareholders, who have 5% or MORE of the voting rights in the company, are entitled to require the company to circulate a written resolution.
How long after shareholders exercise their right, must directors call a written resolution?
21 days after the request.
What are post-decision requirements needed for companies?
Filing at companies house, if it is special resolution.
Internal administration
What are companies annual responsibilities?
They must keep adequate accounting records.
Must ensure accounts are produced for each financial year - a true and fair view of the state of affairs at the company at the end of the financial year
Directors must prepare a directors report for each financial year to accompany accounts.
Must file accounts for each financial year at companies house
Must file a confirmation statement, CS01 within 14 days from companys confirmation date.
Which companies do NOT have to prepare a directors report?
Private companies classed as small company or micro-entity.
What is a small company or a micro-entity?
Small means balance sheet total of not more than 5.1 million, or a turnover of not more than 10.2 million, and no more than 50 employees.
Microentity means a company with a balance sheet total of not more than 316,000, a turnover not more than 632,000, and no more than 10 employees.
What is the form CS01, and when must it be filed?
Confirmation statement, within 14 days from the companys confirmation date, the anniversary of its incorporation.
Makes sure that the information is correct and up-to-date (on directors, shareholders, PSC etc)
What are company secretary’s?
Deal with legislative administrative requirements. Officer of the company.
Have apparent authority to enter into contracts of administrative nature.
How can a company secretary be removed from office?
Can resign, or director can remove by board resolution .if written contract, may show removal from office.
What forms are needed if a company secretary is introduced to office?
AP03 within 14 days of appointment.
Which form is needed for the removal of a company secretary?
TM02 within 14 days of resignation or removal
What is a company auditor?
Accountant, main duty is to prepare a report on the company’s annual accounts - to be sent to shareholders.
How is an auditor appointed?
Directors of a private company appoint the companys first auditor, and after that the shareholders have the power to appoint the auditor, by ordinary resolution.
What is the liability for auditors?
Do not owe a duty of care to the shareholders or new shareholders.
Can be sued by negligence by company. Knowingly or recklessly including misleading, false or deceptive material in the auditors report.
How do you remove an auditor?
Any time by ordinary reoslution. Shareholder must give special notice to the company of the proposal to remove the auditor.
What form is needed to tell companies house that a director has retired?
TM01
Within 14 days
