Company Decision Making Flashcards
How do directors make decisions in a company?
A) By passing resolutions at board meetings
B) By voting at shareholder meetings
C) By making individual decisions
D) By signing written agreements only
A) By passing resolutions at board meetings
📖 Explanation: Directors make decisions through board resolutions at board meetings unless the decision is taken via a written resolution, as allowed by Model Articles (MA 7 & 8).
What is the voting threshold for an ordinary resolution at a general meeting?
A) 25%
B) More than 50%
C) 75%
D) Unanimous approval
B) More than 50%
📖 Explanation: Ordinary resolutions (ORs) require a simple majority (over 50%) of votes cast at the meeting (s 282 CA 2006).
What type of resolution is required to amend a company’s Articles of Association?
A) Ordinary resolution
B) Written resolution
C) Special resolution
D) Board resolution
C) Special resolution
📖 Explanation: A special resolution (SR), which requires at least 75% approval, is needed to amend the company’s Articles (s 283 CA 2006).
Who can demand a poll vote at a General Meeting under Model Articles?
A) Any shareholder
B) The directors only
C) Shareholders holding at least 10% of voting rights
D) The company secretary
C) Shareholders holding at least 10% of voting rights
📖 Explanation: Under Model Articles (MA 44), a poll vote can be demanded by the chairperson, the directors, two or more shareholders, or shareholders with at least 10% of voting rights.
Which decisions CANNOT be passed by written resolution?
A) Appointment of a director
B) Removal of a director
C) Declaring a dividend
D) Issuing shares
B) Removal of a director
📖 Explanation: Under s 288(2) CA 2006, removal of a director (s 168) and removal of an auditor (s 510) cannot be passed by written resolution
A private company is voting on an ordinary resolution. The shareholders vote as follows: A (40%), B (30%), C (20%), and D (10%). A and D vote in favor, while B votes against. C abstains. What is the outcome?
A) The resolution passes
B) The resolution fails
C) The resolution must go to board approval
D) The resolution is void because of the abstention
A) The resolution passes
📖 Explanation: An ordinary resolution (OR) needs a simple majority (over 50%). Since A and D together have 50%, and abstentions do not count, the resolution passes (s 282 CA 2006).
A general meeting is held to vote on a special resolution. The shareholders vote as follows: A (30%), B (25%), C (20%), D (25%). A votes against, while B, C, and D vote in favor. What is the outcome?
A) The resolution passes because 75% of shareholders are in favor
B) The resolution is invalid because one shareholder abstained
C) The resolution passes because more than 50% is in favor
D) The resolution fails because it needs 80%
D) The resolution fails because it needs 80%
📖 Explanation: A special resolution (SR) requires at least 75% approval (s 283 CA 2006). The total in favor is 70% (B + C + D), which is not enough, so the resolution fails.
A company has four shareholders: A (50%), B (20%), C (15%), and D (15%). A special resolution is proposed. A votes against, while B, C, and D vote in favor. What happens?
A) The resolution passes because it has more than 50%
B) The resolution fails because A holds the largest share
C) The resolution fails because it needs 75% approval
D) The resolution passes because shareholders B, C, and D together have 50%
C) The resolution fails because it needs 75% approval
📖 Explanation: A special resolution (SR) requires at least 75% approval (s 283 CA 2006). Here, B + C + D = 50%, so the resolution fails.
A company is appointing a new director via an ordinary resolution. The company has 100 shares. The votes are: 40 in favor, 30 against, and 30 abstaining. What happens?
A) The resolution fails because 30 shares abstained
B) The resolution passes because it has a simple majority of votes cast
C) The resolution is void because abstentions count as votes against
D) The board must approve the appointment instead
B) The resolution passes because it has a simple majority of votes cast
📖 Explanation: Ordinary resolutions require a simple majority of votes cast (s 282 CA 2006). Abstentions do not count, so 40 votes in favor vs 30 against = resolution passes.
A private company is voting on a written ordinary resolution. The shareholders are: A (40%), B (30%), C (20%), and D (10%). A and D vote in favor, while B is against. C abstains. What happens?
A) The resolution passes
B) The resolution fails because abstentions count as votes against
C) The resolution is invalid due to the abstention
D) The resolution must be re-voted at a general meeting
B) The resolution fails because abstentions count as votes against
📖 Explanation: In written resolutions, abstentions count as votes against. A and D have 50%, which is not enough (s 288 CA 2006).
