Company Directors Flashcards
Directors’ voting powers:
For companies with more than one director, decisions should be made by majority vote at a meeting or unanimously by any other means.
Quorum for a meeting of directors:
Two - if company has more than one director UNLESS the articles specify otherwise
Director’s duty to declare an interest in a transaction:
s182 - a director must declare an interest in an existing transaction or arrangement. A breach of the obligation to disclose the nature and extent of the director’s interest is an offence.
s177 - duty to declare an interest in a proposed transaction or arrangement.
Chairperson’s casting vote:
At BM - the Chairperson has a casting vote in the event of a deadlock.
At GM - the Chairperson does NOT have a casting vote.
Definition of a shadow director:
Someone who has given instructions to a company director and the director is accustomed to act in accordance with those instructions.
Impact of a disqualification order:
A disqualified director cannot take part in the promotion, formation or management of a company without leave of the court.
The disqualification period for a person disqualified as an unfit director of an insolvent company is between two and 15 years.
Procedure for ratification of breach of directors’ general duties?
Where a breach of any of the general duties had occurred, the shareholders may ratify a breach of duty by ordinary resolution. The shareholders can also ratify negligence, default or breach of trust.
Not all breaches can be ratified - fraud/bribe cannot be ratified under s.176.
Definition of person with significant control (PSC)
People with significant control meet one of the following conditions:
Hold more than 25% of shares.
Hold more than 25% of the voting rights.
Have the right to appoint or remove a majority of the board of directors of the company.
Have the right to exercise, or actually exercise, significant control over the company.
What percentage of shareholders is required to request directors to call a GM?
Shareholders owning not less than 5% of all shares entitled to vote have the right to require directors to call a GM at which they could vote on the removal of a director from office.
Statutory restrictions on who may be a director?
Very few.
A director must be at least 16.
A director must not be an undischatged bankrupt without leave of the court.
A person who is certified by a medical practitioner as physically/mentally incapable or acting as a director (and likely to remain so for more than 3 months) can’t be appointed.
Do the shareholders need to declare any personal interests when they vote at general meetings?
No, the shareholders are not subject to the directors’ duties.
Can a director with an interest in a transaction count in the quorum at a board meeting to approve the transaction?
No, the director cannot count in the quorum at the BM or vote on the relevant transaction.
Can directors dismiss another director?
No, a director can only be dismissed before the expiration of their period of office by an ordinary resolution of the shareholders.
If a disqualification order is made, what period of disqualification may be ordered?
The court will specify a period of disqualification between 2 and 15 years.
Advantage of a shareholders’ agreement?
The shareholders’ agreement binds all parties to the agreement and provides a remedy if one of its terms is breached.
