Company procedure

Question 1

What does Art.9 MA say?

Answer 1

Gives the directors flexibility in regulating their meetings, providing that any director may call a BM or require the company secretary to do so at any time.

Question 2

Feature of board resolutions

Answer 2

Can be passed, without great formality, at a BM.

Question 3

What are the requirements set out in Art.11(2) MA?

Answer 3

Requires a minimum of two directors to be present for the meeting to be quorate, unless the articles provide otherwise.

Question 4

What are the voting methods in board resolutions?

Answer 4

Passed by majority vote on a show of hands. Each director has one vote.
The chairman may have a casting vote to prevent deadlock

Question 5

Situations where matters need to be referred to the shareholders

Answer 5

1. Where a matter is outside the powers of the directors and must be effected by a resolution of the shareholders
2. Where a matter is within the powers of the directors but requires the prior approval of the shareholders before the directors can be authorised to act

Question 6

An example of a matter that is outside the powers of the directors

Answer 6

Making amendments to a company’s articles of association.

S.21 CA 2006 provides that amendments to articles of association are to be made by a special resolution of the company’s shareholders.

Question 7

An example where a matter is within the powers of the directors but requires prior approval of the shareholders

Answer 7

Making a loan to a director of the company.

s.197 CA 2006 a company may make a loan to a director, but not without the prior approval by a resolution of the shareholders.

Question 8

Minimum notice periods for GMs in a private company

Answer 8

14 clear days’ notice is required

s.307 CA 2006 prescribes minimum periods for GMs

Question 9

What are the two meanings of ‘notice of a GM’, depending on its context

Answer 9

1. A document sent to the shareholders by the directors, announcing that a GM will take place
2. A period of time, which elapses between the directors’ act of calling a GM (by circulating the notice document to the shareholders) and the GM itself taking place

Question 10

What happens after a GM has taken place

Answer 10

A second BM will be necessary, to enable the directors to implement the matter on which the shareholders have voted.

Question 11

Why do we need a sequence of three meetings (BM, GM, BM) to put into effect any change or business decisions

Answer 11

1. Allow the directors at the first BM to propose the changes / business decision and convene a GM
2. Obtain shareholder approval in the GM
3. Allow the board of directors, at the second BM, to implement the shareholders’ decision(s)

Question 12

What is a clear days’ notice?

Answer 12

s 360(1) states that the clear-day rule applies to s.307.

In counting the days of the notice period, the day of the meeting and the day the notice is given are both excluded.

Question 13

How does emails and posts work under the clear-day rule

Answer 13

s.1147 provides a default rule whereby, if the notice is posted (or sent by e-mail), it is deemed to be served 48 hours after posting (or 48 hours after the time it was sent by e-mail)

Question 14

How much notice is required to convene a BM?

Answer 14

Only ‘reasonable’ notice is required pursuant to the case of Browne v La Trinidad

The MA provide in Art. 9 that any director may call a meeting of directors

Question 15

What are the numbers required for a GM to be called on short notice?

Answer 15

s.305(5) CA 2006 provides that, for a private company, a GM may be called on short notice if this is agreed by a majority in number of the members who together hold shares with a nominal value of not less than 90% of the total nominal value of the shares which give the right to attend and vote at the GM.

Question 16

What is the statutory provision to pass a written ordinary resolution?

Answer 16

s. 282(2) CA 2006 states that a written ordinary resolution can be passed by a simple majority of the total voting rights of eligible members
(i. e the same voting threshold required for an ordinary resolution if passed at a GM on a poll vote with no shareholders abstaining)

Question 17

What are the statutory requirements of a written special resolution?

Answer 17

S. 283(2),(3) state that a written special resolution must state it is a special resolution and can be passed by a majority of members representing not less than 75% of the total voting rights of eligible members (i.e. the same voting threshold required for a special resolution if passed at a GM on a poll vote with no shareholders abstaining)

Question 18

What is the voting weight in a written resolution?

Answer 18

s.284(1) CA 2006 states that, where a company has a share capital, every member has one vote in respect of each share held by him when voting on a written resolution.

Question 19

Rules regarding copies of the resolutions affect the company’s constitution

Answer 19

Copies of the resolutions affecting the company’s constitution must be sent to the Registrar of Companies within 15 days of their being passed.

Question 20

Consequence of failing to record minutes of meetings

Answer 20

Criminal sanctions - ss. 248(3) and (4) CA 2006 state that if a company fails to record minutes of meetings in the relevant statutory books, every officer in default is liable to a fine.

Question 21

What’s a solicitor’s role in company procedures?

Answer 21

Solicitors are often called on by the company client, director client or shareholder client to advise on the correct procedures to be followed when transacting company business.

If you are negligent and cause loss, then there could be actionable negligence claims against your firm.