Mechanics of Corporate Decision-Making

Question 1

What are the Default Thresholds for Resolutions?

Answer 1

• 50.0001% for Board Resolutions (“BRs”).
• 50.0001% for Ordinary Resolutions (“ORs”).
• 75% for Special Resolutions (“SRs”).

CA 2006 — ss. 282-283.

Question 2

Where can a Board Resolution be passed?

Answer 2

At a Board Meeting (“BM”).

Model Articles — Art. 7(1).

Question 3

Where can a Shareholder Resolution be passed?

Answer 3

• At a General Meeting (“GM”); or
• In the case of Private Companies, in writing.

CA 2006 — s. 288.

Question 4

At a General Meeting, how may Shareholders vote on a Resolution?

Answer 4

Either by a Show of Hands or a Poll.

CA 2006 — s. 284.

If the Shareholder is a corporation, it votes through its corporate representative, who it appoints by Board Resolution.

Question 5

What is the Substantive Difference between a Vote by Show of Hands and a Vote by Poll?

Answer 5

• In a Poll, each Shareholder has to one vote per share; whereas
• In a Show of Hands, each Shareholder only has one vote, regardless of shareholding.

CA 2006 — s. 284(2)-(3).

Question 6

Under the Companies Act, when may the Right to Demand a Poll be exercised?

Answer 6

Subject Matter:

• The matter does not concern the election of the Meeting’s Chairman or the Meeting’s adjournment.

Quroum:

• The demand is made by at least five Members; or
• Members collectively holding at least 10% of the total voting rights for the Resolution; or
• Members collectively holding voting Shares for the Resolution, where the total paid-up value is at least 10% of the total paid-up value of all Shares in that Class.

CA 2006 — s. 321.

Question 7

Under the Model Articles, when may the Right to Demand a Poll be exercised?

Answer 7

Either:

• Before the GM;
• Before a Show of Hands on the Resolution; or
• Immediately after the result of a Show of Hands.

Model Articles — Art. 44(1).

Question 8

Under the Model Articles, who may demand a Poll?

Answer 8

• The Chairperson;
• The Board of Directors;
• At least two Members entitled to vote on that Resolution; or
• Members collectively holding at least 10% of the total voting rights for the Resolution; or

Model Articles — Art. 44(2).

Question 9

Under the Model Articles, when may a demand for a Poll be withdrawn?

Answer 9

• When the Poll has not yet been taken; and
• The Chairperson consents to the withdrawal.

Model Articles — Art. 44(3).

Question 10

Who may call a Board Meeting?

Answer 10

Any Director.

Model Articles —Art. 9.

Question 11

What is the Quorum for a Board Meeting?

Answer 11

Two Directors.

Model Articles —Art. 11(2).

Question 12

Procedurally, how are Board Resolutions decided?

Answer 12

By majority vote on Show of Hands, with the Chairperson withholding their vote to act as tiebreaker where necessary.

Model Articles — Arts. 7(1), 13(1).

Question 13

Who may call a General Meeting?

Answer 13

The Board, by way of notice with 14 clear days.

CA 2006 — ss. 302, 307(1).

It notice is posted or emailed, it is deemed to be served 48 hours after sending (s. 1147).

The notice must contain the date, time, place, nature of business at the meeting, a statement of rights, and the text of the resolution(s).

Question 14

When may a General Meeting be called on Short Notice?

Answer 14

If it is agreed to by:

• A nominal majority of Members; who
• Hold at least 90% of the total nominal share capital.

Question 15

What is the Quorum for a General Meeting?

Answer 15

Two Shareholders.

CA 2006 — s. 318(2).

For single-member Companies, it is only one (s. 318(1)).

Question 16

What is the Rule of Thumb for which Type of Resolution is required for which Type of Decision?

Answer 16

• Board Resolutions for day-to-day decisions.
• Ordinary Resolutions for important transactions, particularly concerning Directors.
• Special Resolutions for very important transactions.

You cannot remove a Director or an Auditor by Written Resolution.