Company Shareholders Flashcards
How do you become a shareholder?
The 2 people who sign the memorandum of association as subscribers, are automatically the first shareholders.
You can introduce in 2 ways:
Obtain shares from an EXISTING shareholder: (buying, recieving as a gift, or if dies)
Allot new shares, and sells them to new or existing shareholders.
What is the register of members?
Every company must keep a register of members.
May elect to keep information on central register at Companies House.
What are share certificates?
All shareholders have the right to receive a share certificate. This is PRMA FACIE evidence of the holders entitle to the shares.
When must share certificates be issued to shareholders?
2 months of the allotment of shares, or 2 months from transfer of shares being lodged with company
What is the PSC register
Private and non-traded public companies must keep a register of persons with SC.
Enable third parties to know who controls more than 25% of the voting rights.
What are the forms that must be filed for PSC?
PSC01 - completed by individual
PSC07 - completed if anyone ceases to be a PSC
PSC04 - anyone who already appears, but their details change
What is the deadline for filing forms for PSC?
14 days from date the company made the change in its PSC register
What are articles of association?
Companys constitution is a statutory contract between the SHAREHOLDER and the COMPANY.
This gives shareholders a remedy for rbeach of contract.
Allows shareholders to take action against other shareholders of the company, where the shareholders membership rights have been infringed
What are shareholders agreements?
Bind all of the parties to the agreement, and provide remedy if one of its terms is breached.
What are examples of matters which are commonly included in shareholders agreements?
Restriction on transferring shares
Bushell v Faith clauses
No competing clause
What are voting rights that shareholders have?
Right to send proxy to a general meeting
Right to a poll vote
Right to receive notice
Right to requisition a general meeting
Right to apply to court to call a general meeting
Right for a shareholder/s with me than 5% require circulation of a written statement
Right of shareholders holding more than 5% to require written resolution with this statement
What rights do shareholders hold?
Right to recieve dividend, as long as there are profits available
Right to apply to court for company to be wound up
Right to remove director by ordinary
Right to remove auditor by ordinary
Right o inspect (without charge), companys minutes of general meetings, all shareholders resolutions, all statutory registers, directors service contracts, any contracts relating to the company’s purchase of its own shares.
Right to receive a copy of the companys annual accounts and reports
Right to seek an injunction to restrain the company from doing something prohibited by constitution
What are the different types of shareholders?
Corporate shareholders
Groups of companies
What is a subsidiary of another company and a holding company?
Several companies will link together to form a network of companies. When a company owns shares in ANOTHER< it may be that one of the companies is classed as a subsidiary of the other.
Holding company if:
- that other company holds a majority of its voting rights,
- or, that other company is a member of it and has the right to appoint ot remove its board of directors
- it is a subsidiary of a company that is itself a subsidiary of that other company
What is a wholly-owned subsidiary?
It has no members except that other.
What are the different types of shares?
Ordinary shares
Preference shares
What are ordinary shares?
Give shareholders right to attend and vote at general meetings.
Entitled to receive dividend if they are declared.
What are preference shares?
Receive enhanced rights of some sort.
Eg - guaranteed rights to a dividend.
Preferential shareholders are often people who wish to invest in a company, and are willing to FOREGO voting ights, in return for greater financial returns.
What is a cumulative preferential shareholder, or a non-cumulative preferential shareholder?
Cumulative: preference shareholder has to be paid any missed dividends from vinous financial years as well as current.
Non-cumulative: do not carry this right.
What are participating preferential shareholders?
Have the further right to receive profit or assets, in addition to other preference share rights.
What are the 2 protections of minority shareholders?
Unfair prejudice petitions
Derivative claims
Who are minority shareholders?
Lower voting than others.
What does s 994 CA state amount unfair prejudice petitions?
Allows any shareholder to apply to the court for an order for a remedy, where they feel that they have been unfairly prejudiced as a shareholder.
What are the grounds for a prejudice petition?
The companys affairs have been conducted in a manner that is unfairly prejudicial to the interests of the members.
An actual or proposed act or omission of the company is or would be so prejudicial.
