Company meetings and decision making

Question 1

Explain the difference in the ways that votes are calculated at a meeting and by using the written resolution procedure.

Answer 1

Votes are calculated differently based on whether a resolution is at a meeting or if the written resolution procedures is used.

• where the resolution is tabled at a meeting, the requisite majority is calculated based on the votes cast by those eligible to vote (ss. 282(3) and (4) and 283(4) and (5)). In other words, the votes are calculated based only on those who actually vote.
• where a written resolution is used, the requisite majority is calculated based on the voting rights of the total number of members eligible to vote (ss. 282(2) and 283(2)), not just those who actually do vote.

Question 2

Explain the difference between an ordinary resolution, a special resolution and a resolution.

Answer 2

• an ordinary resolution is a resolution that is passed by simply majority (i.e. over 50%) (s. 282(1));
• a special resolution is a resolution that is passed by a majority of not less than 75% (s. 283(1)); and
• a resolution (i.e. one that is not specified as ordinary or special) will be classed as an ordinary resolution (and so will require a simple majority), unless the company’s articles specify a higher majority or unanimity (s. 281(3)).

Question 3

What does the unanimous assent rule state?

Answer 3

The unanimous assent rule provides that if all of the members agree on a matter, the decision will be validly made even if no meeting takes place and no resolution is passed.

Question 4

Why types of decisions cannot be taken by unanimous assent?

Answer 4

the courts have limited the ability to use the unanimous assent rule in several ways, including:

• the unanimous assent rule will not apply where statute requires that a decision be taken at a meeting (Re Oceanrose Investments Ltd [2008] EWHC 3475 (Ch));
• in EIC Services Ltd v Phipps [2003] EWHC 1507 (Ch), the court stated that the unanimous assent rule can only be used in cases where (i) the members who assented had appropriate or full knowledge of the matter in question; and (ii) all the members gave their actual assent (if a member’s assent is not sought, the rule will not apply even if the member would likely have assented); and
• the rule cannot be used to make a decision that could not have been made by a resolution (e.g. to declare an unlawful dividend. Secretary of State for Business, Innovation and Skills v Doffman [2010] EWHC 3175 (Ch)).

Question 5

Identify three possible limitations on a member’s ability to vote

Answer 5

• a member may be unable to vote if his shares have no voting rights;
• a company’s articles may place restrictions upon a members’ ability to vote;
• statute may limit a member’s ability to vote (e.g. a director who is also a member cannot vote on a resolution to ratify his negligence or a breach of duty (s. 239(3) and (4).

Question 6

What are the two methods of voting on a resolution and how do they differ?

Answer 6

There are two different ways to pass resolutions at a meeting:

• the first method is a show of hands, under which the members attending raise their hands to signify support for, or opposition to, a resolution. Each member will have one vote, unless the articles state otherwise (s. 284(2) and (4)).
• The second method is a poll vote, under which each member has one vote per share, unless the company has no share capital, in which case, each member has one vote (s. 284(3) and (4)).

Question 7

What is a proxy?

Answer 7

A member is entitled to appoint another person (known as a ‘proxy’) to exercise all or any of their rights to attend, speak and vote at a meeting of the company (s. 324(1)).

Question 8

What is a corporate representative?

Answer 8

A corporate representative is a person who has been authorised by a resolution of the directors of a company (A) to represent A at a meeting of another company (B) in which A is a member (s. 323(1)). The representative will be entitled to exercise A’s powers as a member at the meeting.

Question 9

What types of company must hold an AGM?

Answer 9

The requirements placed upon companies to hold an AGM are as follows:

• a private company does not need to hold an AGM but it can do if it so wishes. A private company will be required to hold an AGM if it is a traded company (s. 336(1A)) or if its articles require than an AGM be held
• a public company must hold an AGM every year within a six-month period beginning with the day following its accounting reference date (s. 336(1)). This period is increased to nine months in the case of a traded company (s. 336(1A)).

Question 10

Identify five items that typically arise at an AGM

Answer 10

• laying the accounts and the various reports before the meeting;
• a resolution providing that the members agree to receive and adopt the accounts and reports;
• approving the remuneration report (if the company is quoted);
• approving the (re-)appointment of the directors and the auditor
• declaration of a final dividend
• providing directors of the company with authorisation to engage in certain acts (such as allot shares, disapply pre-emption rights, authorise the company to purchase its own shares and so on).

Question 11

Under the model articles, when can a chair adjourn a meeting of the company?

Answer 11

The model articles (model articles for private companies, article (41(2) and (3); model articles for public companies, article 33(2) and (3)) provide that a chair can adjourn a meeting in the following circumstances:

• if a meeting is not quorate within half an hour of the time it was due to start, or if it starts quorate but then becomes inquorate, then the chair must adjourn the meeting;
• the chair may adjourn the meeting if the meeting consents to an adjournment;
• the chair may adjourn the meeting if it appears to them than adjournment is necessary to protect the safety of any person attending the meeting or ensure that the business of the meeting is conducted in an orderly manner; or
• the chair must adjourn a general meeting if directed to do so by the GM

Question 12

What records of meetings and resolutions must the company keep, and for how long must they be kept?

Answer 12

Specified records must be kept by a company for at least 10 years (s. 335(2)) and any member can inspect those records free of charge (s. 358(3)). The records that must be kept are:

• copies of all resolutions of members passed otherwise than at general meetings (such as written resolutions);
• minutes of all proceedings of general meetings; and
• details of decisions taken by a sole member (ss. 355(1) and 357).