Company decision-making, officers, and shareholders Flashcards
Can directors delegate their powers?
Yes, as they see fit (Model Articles)
How to give notice for directors’ meeting
It must be reasonable, include time, date, and place
Doesn’t have to be in writing
Minimum quorum for directors’ meeting
2
Director not counted in quorum for directors’ meeting if:
The decision is concerned with an actual/proposed transaction with the company in which the director is interested
Directors must declare personal interest in proposed transactions with the company, except if:
- it cannot be reasonably regarded as likely to create conflict,
- directors are/should already be aware of it,
- it concerns a service contract
Majority needed to pass directors’ resolution
Simple majority (chair has casting vote)
If it’s a written resolution: must be UNANIMOUS
Notice requirements for GM
- directors must notify every shareholder + director + auditor
- give hard copy/electronic/via website
What a notice of GM must include
- time + date + place,
- general nature of meeting’s business
- exact wording of any special resolution proposal,
- right for shareholder to appoint proxy to vote on his behalf
Notice period for GM
14 clear days after deemed to be received
When is a notice of GM deemed to be received?
If handed over: that day
If sent by post/email: first business day after 48 hours after sending
Quorum for shareholders’ meeting
2 (unless only 1 shareholder in total)
How is voting done at GM?
Default: show of hands
BUT: can demand poll voting (1 share = 1 vote):
- chair,
- directors,
- 2/more people with right to vote,
- anyone with 10% or more of voting rights
Written resolutions lapse time
28 days from circulation (day of circulation = day 1)
How is a written resolution passed?
By signatures of majority of shareholders
1 vote = 1 share
Who can demand GM/written resolution circulation?
Shareholder with 5% of voting rights or more
Must be circulated/called within 21 days
When can a GM be held on short notice?
If majority of shareholders consent + they combined hold 90% or more of voting shares (95% in public company)
Annual responsibilities of companies
- accounts for each financial year
- directors’ reports (except small companies),
- file confirmation statement within 14 days of incorporation anniversary
File all 3 at Companies House
When must new shareholders be registered on the register of members?
As soon as practicable, but max. 2 months after acquires shares
What is a share certificate + when must be issues?
Prima facie proof of title to shares
Must be issues within 2 months of acquiring shares
Who is a person with significant control?
Shareholder with more than 25% of shares, or 25% of voting rights
Who is a company’s constitution a contract between?
Company + shareholder, and shareholder + shareholder
When do shareholders have a right to dividends?
- if profits available,
- directors recommend an amount, and
- shareholders approve it
What are preference shares?
Generally forego voting rights in return for more profits (eg. guaranteed right to dividend)
When + who can apply for a s.994 unfair prejudice claim?
A shareholder, if the company’s affairs are conducted in a manner unfairly prejudicial to all/some shareholders, or a proposed act/omission would be so prejudicial
Court’s remedy for s.994 unfair prejudice claim
Remedy as sees fit- usually a share buyout
When + who can apply for derivative claim?
A shareholder, for a wrong done to the company arising from an act/omission of a director
Court must refuse permission for derivative claim if:
- person acting to promote success of company wouldn’t bring the claim,
- case arises from act/omission authorised by board,
- case arises from act/omission ratified by board
Factors to consider in permission for derivative claim:
- if shareholder acting in good faith,
- importance someone promoting success of company would attach to claim,
- whether authorisation/ratification likely,
- whether board decided not to continue claim,
- whether shareholder has claim he could pursue in own right
Who is liable for costs if permission for derivative claim not granted?
The shareholder (if granted, company meets all costs)
Definition of substantial property transaction
When a director/someone connected to him buys from/sells to the company a non-cash asset of substantial value
“Connected person” is…
- member of director’s family, or
- company in which director/connected person:
owns 20% or more of shares, or is entitled to exercise over 20% of voting power at any GM
“Substantial value” is…
Anything over 100,000, or over 5,000 AND over 10% of company’s net asset value
How to approve a substantial property transaction?
Ordinary resolution
If not, transaction is voidable!
Who may have to account for profits from unauthorised substantial property transaction?
- any director with whom transaction entered,
- any person connected to the director with whom transaction entered + director to whom person connected,
- any other director who authorised the transaction
Which decisions are taken by shareholders alone?
- Change of Articles
- Change of registered name
How can the auditor be removed?
By ordinary resolution
