Mailing #3 Flashcards
How was a meeting defined in Sharp v Dawes (1876)?
An assembly of people for a lawful purpose.
What three things must be done for a meeting to be valid in common law?
1 Be properly convened
2 Be properly constituted
3 Be held in accordance with the rules governing that meeting.
What are the three types of shareholder meeting?
General meeting
Annual general meeting
Class meeting
What is a general meeting?
Meeting of all the members
What is a class meeting?
Meeting of a particular class of shareholders
What is a traded company?
A company which has:
- shares carrying the right to vote at general meeting
- whose shares are admitted to trading on a regulated market or
- with the consent of the company
s 360 CA
Who may call a general meeting? (3 options)
1 Directors
2 Members
3 The court
Which section CA allows directors to call a general meeting?
S 302
When MUST the directors call a general meeting, according to s 303 CA?
When members representing 5% of paid-up voting request it.
How soon must directors call a general meeting following a valid request from members?
Within 21 days of which they become subject to call the meeting. To be held not more than 28 days from the date of notice.
What were the facts regarding a court-ordered meeting in El Sombrero (1958)?
Three members of a company with a quorum of two. Two members were unwilling to attend meetings, so the third applied to the court, who ordered a meeting with a quorum of one.
What is the notice period of a general meeting for a public or private company?
At least 14 days (s 307 CA)
What is the notice period of an AGM for either a public company or a private company that is traded?
At least 21 days (S 301 CA)
Which section CA 2006 regards notice periods for general meetings?
s 307
When may the notice period of a general meeting be shortened?
Where agreed to by:
- a majority in number of members having the right to attend and vote, who
- hold the required voting percentage
For a plc AGM, shorter notice required consent of all members entitled to attend and vote.
Who is entitled to notice of general meetings?
- every member
- every director
- every personal representative (of those who have died)
- every trustee in bankruptcy
- company auditor
What is the consequence of an ACCIDENTAL failure to give notice to someone who is entitled to receive notice of a general meeting?
S 313 - accidental failure to give notice to one or more persons shall be disregarded for the purpose of determining whether the notice is duly given.
What information must notice of a meeting contain?
S311 CA:
- date, time and place
- notice of a general meeting must state the general nature of the business.
What was the ruling in Kaye v London Tramways Co (1898)?
Notice of a meeting stated that it was to consider the sale of the company’s business, but failed to mention the compensation that would be paid to the directors under the contract of sale. Held that the resolution was invalid, as the notice was insufficient in providing the information shareholders needed to reach a decision.
What is stated in s 325 CA regarding the right to appoint a proxy?
Every notice must contain with reasonable prominence a statement informing the member of their right to appoint a proxy.
What extra meeting notice requirements are set out in S311 CA for traded companies?
Statement giving:
- website address with information required by S311
- the right to vote is determined by reference to the register of members
- procedures required to attend and vote
- forms for the appointment of proxies
- details if members can vote in advance
- the right to ask questions
What information regarding notice of a meeting must a traded company hold on its website?
- Matters in the notice
- Total number of shares and class of shares in the company in which members are entitled to exercise voting rights
- Members’ statements, resolutions and matters of business received after first date on which notice is given
- Access must not be restricted by payment of a fee
- Information must be available on website for 2 years
What constitutes a quorum for a single member company?
A single member (CA 318)
Where is the quorum of a company determined?
In the articles.
If the articles are silent on quorum, what is the default position?
2 members make a quorum, so long as they are not BOTH corporate representatives or proxies (but one of them may be) - s 318 CA
What is the quorum for a class meeting called to alter class rights?
2 or more members of that class (or their proxies) provided that they represent at least one third in the nominal value of that class’ shares.
How is the chairman of a meeting determined according to CA s 319?
The company’s articles can decide who is chairman.
If the articles are silent, then the meeting may elect a chairman by resolution.
What common law duty does the chairman of a meeting have?
Duty to act in good faith. i.e. act in the interest of the company, not himself.
Where are the chairman’s powers to be found?
The articles.
What powers does a chairman have to maintain order?
- to rule the speaker out of order
- to expel a member from the meeting
- to adjourn the meeting
What rules relating to adjournment of a meeting are set out in John v Rees (1969)?
Chairman should:
1 Make earnest and sustained attempts to restore order
2 If (1) fails, to put into effect any provisions for adjournment
3 if (2) fails, adjourn meeting and make sure all members are aware
4 If (3) fails, and there is actual physical violence, adjourn the meeting and leave.
What steps should the chairman take to ensure the meeting is conducted in a proper manner?
1 Ensure the meeting has been properly convened. 2 Follow the agenda 3 Deal with any disruptions 4 Remain impartial 5 Act as the meeting's timekeeper.
S 319 A CA requires that a traded company must answer any question put to it by a member attending a general meeting. When may the company refuse?
1 It would unduly interfere with the meeting
2 It involves the disclosure of confidential information
3 The answer is on the website
4 It is undesirable in the interests of the company
5 It is undesirable for the good order of the meeting
What statutory rules exist on the format of agendas?
None
What are the 4 broad types of agenda?
1 Skeleton agenda
2 Detailed agenda
3 Chairman’s agenda
4 Bell curve agenda
What does s 320 CA state regarding voting?
A meeting can vote by show of hands.
The chairman’s declaration that the resolution has been passed or failed is conclusive evidence of the fact.
How can a chairman’s ruling on the number of votes be defeated?
If there is a valid demand for a poll.
Who can demand a poll according to s 321 CA?
- 5 members of less according to the articles.
- a member or members holding not less than 10% voting rights
- a member or members holding note less than 10% of the paid up voting shares.
- others as the articles may specify
Does a member holding more than one vote need to use all his votes in the same way?
No, he can vote in multiple different ways (s 323 CA)
What is a proxy?
A person appointed by a member to exercise any or all of his rights to attend and speak and vote at a meeting of the company.
Which sections CA concern proxies?
ss 324 - 330
How many proxies can a member appoint? s 324 CA
One per share
How must a proxy vote (s 324A CA)?
In accordance with instructions given by the appointee.
How must the appointment and termination of proxies be carried out in a listed company (s 327A CA)?
In writing, and the company must provide an electronic address for this purpose.
Can a proxy chair a meeting?
Yes (s 328 CA)
Can a proxy demand a poll?
Yes (s329 CA)
When must termination of a proxy be sent to the company.
No longer than 48 hours prior to a meeting
What is the difference between one-way and two-way proxies?
One-way = appoints a person to represent the member Two-way = appoints the person and instructs them how to vote.
Why are two way proxies important?
Because the chairman is usually sensible option for a proxy (since they will definitely attend the meeting), and so the chairman needs to be told how to vote.
What were the facts in Dumoatic (1969)?
Duomatic was in liquidation, and the liquidator discovered that directors’ salaries has been authorised by unanimous informal assent of the shareholders. Held that the assent was valid despite being informal.
What is the Duomatic Principle?
Where it can be shown that all shareholders who have a right to attend and vote at a general meeting assent to some matter which a general meeting of the company could carry into effect, that assent is as binding as a resolution in general meeting would be.
What is required by UKCGC main principle E.2?
The board should use the AGM to communicate with investors and encourage their participation.
What is required by UKCGC provision E.2.1?
Separate resolutions for separate issues.
Proxy forms should allow options of “for/against/withold”.
What is required by UKCGC provision E.2.2?
Ensure all valid proxies are recorded and counted.
Publish info on number of shares on which proxies have been recorded; votes for; votes against; votes where proxy ordered vote be witheld.
What is required by UKCGC provision E.2.3?
Chairman of audit, remuneration and nomination committees should be available to answer questions at AGM.
What is required by UKCGC provision E.2.4?
Give 20 working days notice of AGM
What is a formal/procedural motion?
Any proposal which affects the way business is conducted, rather than the business itself.
Is notice required for a procedural motion?
No, they are purely a matter for the meeting itself.
What is a “point of order” regarding procedural motions?
The chairman indicates the speaker to stop talking, either because the rules are not being followed, or that the speaker is not referring to the agenda item.
What are the three types of formal motion for ending discussion on the current topic?
1 The question be now put
2 The meeting postpone consideration of the subject
3 The meeting proceed to next business.
What formal motions are available to end the meeting?
1 That the meeting be adjourned
2 That the chairman leave the chair
What were the facts regarding adjournment in Byng v London Life Association [1989]?
The EGM was held in a too-small venue. Arrangements were made to host video links to different rooms, but chaos ensued. The chairman adjourned and reconvened the meeting for the afternoon at a different venue. A number of members objected, but it was held anyway. The meeting was invalid, as the company should have been left to determine the date.
What are the possible responses to the following formal resolution: “that the question be NOT not put”?
Yes: the discussion ends and the meeting moves to the next item.
No: discussion ends and the resolution is put to vote.
What records must a company keep according to s 355 CA?
- copies of all resolutions passed otherwise than at general meeting
- minutes and proceedings of general meetings
- decisions of sole members
How long must records of resolutions and minutes of general meetings be kept? (s 355 CA)
10 years
Where are records of resolutions and minutes of general meetings to be kept? (s 358 CA)
The registered office or other location specified in s 1136.
Who must sign the minutes of general meetings? (s 356 CA)
The chairman of the meeting.
What 4 qualities should good minutes have?
- objective
- clear
- concise
- complete
How should minutes be written? e.g. which tense?
Impersonally
Past tense
What key information should minutes contain?
- Company name
- Type of meeting
- Day and place of meeting
- Those present and apologies received
- Minutes of narration (what was discussed)
- Minutes of resolution (what was agreed)
What are the usual matters for consideration at the AGM? (5)
1 Consider and approve directors’ and auditors’ reports
2 Sanction final dividend recommended by directors
3 Appoint directors
4 Appoint and fix auditors’ remuneration
5 Special business such as constitutional change
What might a skeleton agenda for a AGM include?
1 Reading the notice 2 Directors' report 3 Auditors' report 4 Declaration of dividend 5 Appointment of directors 6 Appointment of auditors 7 Special business
What documents must be prepared prior to a meeting?
Attendance sheets
Proxy list
Spare documents such as agendas, registers etc.
What meeting venue arrangements must be considered prior to a meeting?
Stewards
Seating
Press
Heating, lighting etc
Which section CA requires a plc to hold an AGM?
S 336
When must a plc hold its AGM?
In each period of 6 months beginning with the day following its accounting reference period.
What is the notice period for a plc AGM?
21 days (s 337 CA), unless all members entitled to vote have agreed to shorter notice.
S 338 CA allows for members to require the company to give notice of resolution. When must the company comply with this request?
If members representing 5% of the total voting rights or at least 100 members holding voting shares on which an average £100 is paid, request it.
When members requisition a resolution at an AGM, how soon before the meeting must it be received?
Not later than 6 weeks before the AGM
S 338 CA allows for members to require the company to include any PROPER item on the agenda of an AGM. When must the company comply with this request?
If members representing 5% of the total voting rights or at least 100 members holding voting shares on which an average £100 is paid, request it.
S 314 CA allows for members to require the company to circulate a statement of up to 1000 words ahead of the AGM. When must the company comply with this request?
If members representing 5% of the total voting rights or at least 100 members holding voting shares on which an average £100 is paid, request it.
When members require a statement to be issued prior to an AGM, how soon before the meeting must it be received?
Not later than 1 week (s 314 CA)
What information must a quoted company make available on its website when a poll is taken? (s 341 CA)
- meeting date
- text of resolutions
- number of votes inf favour
number of votes against
According to s 342 CA, what may the members require the directors to obtain relating to a poll taken at general meeting?
An independent report
What proportion of members must request an independent report to require the directors to obtain one? (342 CA)
Members representing 5% of the total voting rights or at least 100 members holding voting shares on which an average £100 is paid, request it.
How soon must a request for an independent report be received following a poll? (342 CA)
1 week
Who must the directors appoint to produce an independent report on a poll? (343 CA)
An independent assessor
How soon after a request for an independent report on a poll must an independent assessor be appointed? (343 CA)
One week
Who is disqualified from being an independent assessor on a poll? (344 CA)
- an officer or employee of the company (or an associated company)
- a person designated a connected person by the SoS
- a spouse, civil partner, minor child or step child
- any body corporate of which the above is a director or employee.
Can the auditor of a company act as its independent assessor on a poll?
Yes
What must the independent report on a poll state? (s 346 CA)
- the procedures adopted in connection with the poll were adequate
- the votes cast were fairly and accurately recorded
- the validity of the proxy appointments was “fairly assessed”
- the notice of the meeting contained the power to appoint proxy
- name of the assessor
What rights does the independent assessor have? (s 348 CA)
- to attend the meeting
- notice of the meeting
- to access the company’s records relating to the poll
- to access the company’s records relating to the meeting
- to require information from directors, employees, company record holders, bankers, solicitors and auditors
What are the consequences of failing to comply with an independent assessor’s request for information? (s 350 CA)
Criminal offence
When an independent assessor has been appointed to report on a poll, what information must be posted on the website? (s 353 CA)
- the fact of his appointment
- his identity
- the text of the resolution
- a copy of the report
For how long must information relating to an independent report on a poll be kept on the company’s website? ( S 353 CA)
Two years
In what forms may a private company pass a resolution? (S 218 CA)
As written resolutions or in a meeting of members.
In what forms may a public company pass resolutions? (S 218 CA)
Resolutions at a meeting of members.
What is an ordinary resolution (s 282 CA)?
Resolution by simple majority.
What is a special resolution (S 283 CA)?
Resolution by majority not less than 75%
What must be given with the notice of a special resolution to be passed at a meeting?
A statement specifying that this is a special resolution.
What is a resolution requiring special notice (s 312 CA)?
A resolution that is not effective unless given to the company at least 28 days before the meeting.
In practice, when should notice of a resolution be given (s312 CA)?
At the same time as giving notice of the meeting.
Which resolutions require special notice?
- removal of a director (s 168)
- removal of an auditor (s 515)
Can a resolution be amended?
Yes provided, it remains within the scope of the articles and the scope of the notice of the meeting.
What are some examples of ordinary resolutions?
- appointment of directors
- acceptance of report and accounts
- appointment of auditors
- declaration of a dividend
What are some examples of special resolutions?
Constitutional changes:
- alter objects clause
- alter articles
- name change
- re-registration
- modify preemption rights
- create reserve capital
- reduce capital
- allow private company to purchase own shares
- make liability of directors unlimited
- voluntary winding up
What is the definition of a written resolution? (S 288 CA)
A resolution of a private company proposed and passed in accordance with Part 13 Chapter 2 of the CA 2006
What can a written resolution NOT be used for?
Removal of auditors or directors
Who may propose a written resolution of a private company?
Directors or members
What is the name given to those entitled to vote on a written resolution? (S289 CA)
Eligible members
What must be done following proposal of a written resolution by directors? (S292 CA)
- company must send a copy to every eligible member
- the company must send the copy at the same time if practicable
- the company must include a statement showing how to signify agreement
- the copy must include the date by which the resolution must be passed.
What restrictions are placed upon a member’s proposal of a resolution? (S292 CA)
It must note be defamatory, frivolous, vexatious or ineffective.
When MUST the directors circulate a member’s resolution and statement? (S292 CA)
One it has received requests from members representing note less than the requisite percentage of total voting rights (5%, or lower if specified by the articles).
When is a written resolution passed? (S 294 CA)
When the required majority of members have signified their agreement to it.
When does a written resolution lapse? (s 297 CA)
If it is not passed by the end of the period specified in the articles, or the period of 28 days beginning with the circulation date.
What does the CA 2006 state on the rules for board meetings?
Nothing!
Where are the rules set out for board meetings?
- Articles
- UKGCG
(the CA 2006 is silent)
How might the agenda item for board meeting be subdivided (into 2 categories)?
1 Policy making
2 Routine business
What might be covered as “policy making” at a board meeting?
1 Strategic planning
2 Considering managerial reports
3 Supervision of committees
What might be covered as “routine business” at a board meeting?
1 Approval of transfers 2 Sealing of documents 3 Routine finance 4 Budgets 5 Personnel
How is the notice period of a board meeting decided?
By the articles, although in the absence of any provision the common law will apply.
How are rules on voting at board meetings decided?
By the articles. In the absence of any provision, each director has one vote.
Does the chairman have a casting vote at board meetings?
Not unless empowered by the articles.
Does a defect in a director’s appointment invalidate his acts at a board meeting?
No, provided that the defect was unknown at the time.
What is stated in private company Model Article 9, regarding calling a board meeting?
Any director can call a board meeting. Notice must be given to all directors but need not be in writing.
What is stated in private company Model Article 10, regarding the location of a board meeting?
A board meeting does not have to be in one place.
What is stated in private company Model Article 11, regarding quorum at a board meeting?
Quorum can be fixed by the board, but must not be less than two.
What is stated in private company Model Article 12, regarding the appointment of the chairman?
The board appoint the chairman, and if the chairman has not arrived within 10 minutes, may appoint another to chair the meeting.
What is stated in private company Model Article 13, regarding casting votes?
The chairman has a casting vote
What is stated in private company Model Article 14, regarding minutes?
Board minutes must be taken and kept for 10 years
What is stated in public company Model Article 7, regarding board decisions?
Decisions may be by meeting or written resolution.
What is stated in public company Model Article 8, regarding calling of board meetings?
Any director may call a board meeting. Notice must be delivered to each director but need not be in writing.
What is stated in public company Model Article 9, regarding board meeting location?
A meeting does not have to be held in one place.
What is stated in public company Model Article 12, regarding board quorum?
Directors can set the quorum, but no less than 2.
What is stated in public company Model Article 13, regarding board votes?
Each director has one vote and decisions are made by majority.
What is stated in public company Model Article 14, regarding casting votes at board meetings?
The chairman has casting vote
What is stated in public company Model Article 17, regarding board proposal of written resolutions?
Any director can propose written resolutions, and the notice should include the resolution and the time by which it is proposed that directors should adopt it.
What is stated in public company Model Article 18, regarding passing of written resolutions?
A proposed directors’ written resolution is passed when all the directors who wold have been entitled to vote have signed one of more copies.
What is the ICSA guidance on board meetings called?
ICSA Code Of Good Boardroom Practice
What is stated in UKGCG Principle A.1?
The board is responsible for the success of the company
What is stated in UKGCG Principle A.2?
There should be a clear division of responsibilities at the head of the company between the running of the board and the running of the company.
What is stated in UKGCG Principle A.3?
The chairman is responsible for leadership of the board and ensuring its effectiveness.
What is stated in UKGCG Principle A.4?
NEDs should constructively challenge and help develop proposals on strategy.
What is stated in UKGCG Provision B.1?
The board should have the appropriate balance of skills, experience, independence and knowledge of the company to discharge its duties and responsibilities effectively.
What is stated in UKGCG Provision B.2?
There should be a formal, rigorous and transparent procedure for appointment of new directors.
What is stated in UKGCG Provision B.3?
All directors should have sufficient time to discharge their company responsibilities.
What is stated in UKGCG Provision B.4?
All directors should receive induction on joining the board.
What is stated in UKGCG Provision B.5?
The board should be supplied in a timely manner with information in form and quality to enable them to discharge their duties.
What is stated in UKGCG Provision B.6?
The board should undertake a formal and rigorous annual evaluation of its own performance and that of its committees and individual directors.
What is stated in UKGCG Provision B.7?
All directors should submit for re-election at regular intervals, subject to continued satisfactory performance.
What are the 7 provisions of part B of the UK governance code? (CARTIER)
Composition of the board Appointments to the board Responsibilities of the directors Training of directors Information for directors Evaluation of the board of directors Re-election of directors
Which reported produced the three main board committees?
The Cadbury Report
What are the three board committees contained within the UKCGC?
1 Nomination
2 Remuneration
3 Audit
According to the UKGCG, what should be the composition of the nomination committee?
Majority independent NEDs
Which report recommended recruitment of NEDs from the “marzipan layer”?
Tyson report
What are the main duties of the nomination committee?
- regularly review the composition of the board
- prepare succession plans for directors and senior executives
- identify and nominate candidates to fill board vacancies
- prepare job descriptions for board appointments
- review leadership needs
According to the UKGCG, what should be the composition of the remuneration committee?
Entirely independent NEDs, minimum membership of 3 (for large companies).
What are the main duties of the remuneration committee?
- fix and agree policy for remuneration for all directors except NEDs
- review ongoing remuneration policies
- determine targets for performance related pay
- review share incentive plans
- fix termination policy
According to the UKGCG, what should be the composition of the audit committee?
Entirely independent NEDs, minimum membership of 3 (for large companies). At least one with relevant financial experience.
What are the main duties of the audit committee?
- monitor integrity of company financial statements
- review company internal controls
- review whistleblowing arrangements
- make recommendations to the board relating to appointment and reappointment of the company’s auditors.
What precedent was set in Re Portugese Consolidated Copper Mines (1889) regarding directors’ notice?
A director cannot waive in advance their right to receive notice.
What precedent was set in SMith v Paringa Mines (1906) regarding directors’ notice?
If all directors are present and agree, it is possible to hold a board meeting without notice.
What precedent was set in Le Compangnie de Mayville v Whiteley regarding directors’ notice?
Notice can be given orally under Model Articles but must include the date, time and place of the board meeting.
Why should “AOB” at board meetings be confined to minor, non-controversial matters?
Because it is unreasonable to expect directors to make reasoned decisions if they are not given sufficient time to examine the merits.
What is meant by “a quorum should be a disinterested quorum”, when discussing directors’ meetings?
Directors who are interested in a proposed transaction should not vote on it.
What does the ICSA Guide to Best Practice for AGMs recommend as the minumum notice period for an AGM?
20 working days
What is the significance of Re Opera Photographic to the rules around meeting quroum?
A director tried to prevent the board from convening a meeting to remove him by absenting himself and making meetings inquorate. The court ordered the general meeting.
According to CA 2006 s 307, what is the minimum notice period for 1) General meeting and 2) AGM?
14 days
21 days
When is notice considered served when sent by post?
48 hours after posting.
When is notice considered served when sent electronically?
48 hours after sending
