Company Decision-Making Flashcards
What key rights do shareholders have under the Companies Act 2006?
- Voting Rights – Shareholders can vote on key decisions (s. 284 CA 2006).
- Dividends – Right to receive dividends if declared (s. 830 CA 2006).
- Requisition a General Meeting – If holding at least 5% of shares, shareholders can request a meeting (s. 303 CA 2006).
- Pre-emption Rights – Right to first refusal on newly issued shares (s. 561 CA 2006).
What are the requirements for board meetings?
- Notice – Directors must be given reasonable notice (Re Homer District Consolidated Gold Mines (1888) 39 Ch D 546).
- Quorum – At least two directors unless articles specify otherwise (MA 11).
- Voting – Majority vote required; the chairperson has a casting vote if needed (MA 13).
What are the key rules for shareholder meetings?
- Annual General Meeting (AGM) – Only required for public companies.
- Extraordinary General Meeting (EGM) Can be called if 5% of shareholders request it (s. 303 CA 2006).
- Quorum – The default quorum is two shareholders unless the company has only one shareholder, in which case it is one (s. 318 CA 2006).
- Voting Methods – Default is a show of hands, unless a poll vote is requested (s. 321 CA 2006).
- A poll vote can be requested under Model Article 44(2):
The chair of the meeting.
The directors.
At least two shareholders who have the right to vote.
A shareholder or group holding at least 10% of voting rights.
What decisions require an ordinary resolution (simple majority, over 50%)?
- Approving dividends (s. 830 CA 2006).
- Appointing or removing directors (s. 168 CA 2006).
- Approving annual accounts (Companies Act 2006).
- Ratifying a director’s breach of duty (s. 239 CA 2006).
What decisions require a special resolution (75% approval)?
- Altering the company’s articles of association (s. 21 CA 2006).
- Changing the company’s name (s. 77 CA 2006).
- Reducing share capital (s. 641 CA 2006).
- Approving a winding-up petition (s. 84 Insolvency Act 1986).
Who declares dividends and what is the process?
- Directors recommend dividends (s. 830 CA 2006, MA 30).
- Shareholders approve by ordinary resolution.
- Dividends can only be paid from distributable profits.
How are directors appointed?
First Directors – Named in incorporation documents.
Subsequent Appointments – Decided by board resolution (MA 17) or shareholder approval if required.
How can a director be removed?
- By Shareholders (s. 168 CA 2006) – Requires an ordinary resolution with 28 days’ special notice.
- By Board Decision – If permitted under articles.
- Director’s Rights on Removal (s. 169 CA 2006) – The director can:
Right to receive special notice (28 days) before the meeting (s. 168 CA 2006).
Right to make written representations to shareholders (s. 169 CA 2006).
Right to speak at the general meeting.
- Under s. 169 CA 2006, the director can send a proxy (representative) to argue against their removal. person appointed to attend and vote at a shareholder meeting on someone’s behalf.
What legal remedy is available to minority shareholders if they suffer unfair treatment?
- Can petition the court for unfair prejudice if the company’s affairs are being conducted in a way that harms their interests.
- Can bring a derivative claim: sue on behalf of the company if a director breaches their duties.
What records must a company maintain?
- Register of Directors – Includes names, service addresses (s. 162 CA 2006).
- Register of Members – Details shareholders and shareholdings (s. 113 CA 2006).
- PSC Register – Records “Persons with Significant Control” (s. 790 CA 2006).
- Minutes of Meetings – Must be kept for at least 10 years (s. 355 CA 2006).
What key filings must be made with Companies House?
- Annual Confirmation Statement (s. 853A CA 2006) – Must be filed within 14 days after the review date.
- Annual Accounts (s. 394 CA 2006) – Filing deadlines depend on company size.
- Appointment/Removal of Directors (s. 167 CA 2006) – Must be notified within 14 days using Form AP01 (appointment) or TM01 (termination).
