Meetings Flashcards
Can members propose resolutions?
Most resolutions put before members are usually recommended by the directors, however, members can propose resolutions without requiring the consent of directors.
What are the three ways in which a resolution of a company may be validly passed?
There are three ways in which a resolution of a company may be validly passed:
- By use of the statutory WRITTEN RESOLTUION procedure (for private companies only and subject to specified exceptions)
- At a MEETING OF THE MEMBERS of the company duly convened and conducted in accordance with any requirements under the Companies Act 2006 (CA 2006) or the company’sArticles
- In the circumstances where it applies, pursuant to the DUOMATIC principle
Give a brief description of the duomatic principle
The DUOMATIC principle has been formed following the case of Duomatic Ltd [1969]
The principle is used where it can be shown that all members having the right to attend and vote at a general meeting of the company assent to some matter which a resolution approved at a general meeting of the company could carry into effect, that assent is as binding as the resolution in general meeting would be.
No corresponding written resolution powers for public companies within the Act
In a private company, what are the exceptions where a written resolution may not be used?
Members of a private company may pass any resolution to be put to general meeting by written resolution,
EXCEPT:
Remove a director CA2006 s168 OR
Remove an auditor CA2006 s510
Who may propose a written resolution?
Written resolutions may be proposed by
1. directors using the procedure CA2006 s. 291
2. members using the procedure CA2006 ss. 292 to 295 (CA2006 s. 288)
MEMBERS REQUESTS
Any member(s) with 5% or more shareholding or at least 100 members who have the right to vote may request a valid resolution, and request a max 1000 word statement accompany it. CA2006 (s292). Articles may provide for smaller threshold. However, they must meet the cost unless the company has agreed to cover.
A company may not comply with the request if insufficient funds; or it would ineffective by reason of inconsistency with legislation or the company articles, or it’s frivolous, vexations or defamatory. CA2006 (s292(2).
Circulation as above, within 21 days from request.
A company or other aggrieved person may apply to the Court for an order not to comply with the request to circulate the propose resolution and any accompanying statement on the grounds of rights by CA2006 s.292 are being abused.
What is the process for a obtaining a vote on a written resolution?
MUST send copies to all eligible members at the same time either in hard copy, by electronic means or by using a website (CA2006 ss. 291(2) and (3)).
An eligible member is a member entitled to attend and vote at a general meeting (CA2006 s. 289).
Alternatively, can be circulated for signature, but to be valid, all sufficient signatures must be obtained within the 28-day window imposed by CA2006 s. 297.
It must be accompanied by a statement informing the members of how to signify consent and the deadline for receipt of consent.
A member signifies their agreement to a written resolution by returning to the company a document in hard copy or electronically, identifying the resolution and signifying their consent (CA2006 s. 296).
Once agreement has been conveyed to the company it cannot be revoked (CA2006 s. 296(3)).
A written resolution is approved when the requisite majority of members have signified their agreement, votes being calculated according to the number of shares held by each member (CA2006 ss. 284 and 296). If agreement not received within 28 days, then deemed lapsed.
Copies must be sent to the auditors.
Under what circumstances do written resolutions work well?
Written resolutions work well where a company has only a few, responsive, members.
With a large number of members, including some the company may no longer have current address information for, obtaining the requisite majority may be difficult or impossible.
A general meeting does not have the same issue as the majority required at a general meeting is of those members actually voting rather than the total membership.
Describe what a resolution is and what types there are
Resolutions are a formal way to propose and pass decisions at general meetings.
An ORDINARY RESOLUTION is passed by simple majority of 50% or more.
A SPECIAL RESOLUTION is passed by a 75% majority and must be described as such in the notice.
You also have ORDINARY resolutions which required special notice and EXTRAORDINARY resolutions.
What purposes would you use an ORDINARY / SPECIAL REOLUTION?
ORDINARY - for routine business - eg approval of accounts, final dividend, appointments of directors or auditors; alterations to share capital, capitalisation of profits, allotment of shares
SPECIAL - for specific events or as prescribed in CA2006 - eg altering the Articles, change of name, re-registering company status, reduction of capital, purchase of own shares….and others
A copy of the signed resolution must printed and delivered to Registrar of Companies within 15 days of passing
What is an ordinary resolution which requires special notice and what circumstances would this be used?
Ordinary resolution requiring special notice (s312)
CIRCUMSTANCES
to remove a director before expiry of current appointment term
to fill a casual vacancy in office of auditor
to reappoint, as auditor, a retiring auditor who was appointed to fill casual vacancy
to remove auditor before expiry of current term of office
to appoint, as auditor, a person other than retiring auditor
Special notice to propose resolution must be given by member(s) at least 28 days before meeting.
If the meeting is called to be held within 28 days, notice is deemed properly given but not within time required.
On receipt of notice, company must communicate the special notice and proposed resolution to members with notice of meeting, or, if not, advertise at least 14 days before meeting (eg in newspaper).
What is an Extraordinary Resolution?
Extraordinary resolution
CA2006 only provides for ordinary or special resolutions
companies formed before CA2006 whose Articles refer to extraordinary resolutions are permitted to retain those provisions
extraordinary resolution must be described as such - requires 75% majority and signed copy to be delivered to Registrar of Companies within 15 days of passing
Can a resolution be amended?
Yes in ordinary resolution. In special only if grammatical error or spelling mistake.
Provided no restrictions in Articles, amendments to resolutions can, in limited circumstances, be proposed at a general meeting.
The Model Articles require prior written notice of amendments and also protects the validity of a resolution in the event of the chairman, in good faith, ruling a proposed amendment out of order.
The Act does not require the notice of a meeting to set out the precise text of an ordinary resolution and accordingly amendments to ordinary resolutions can be considered at a general meeting provided the amendment:
Is within the scope of the notice;
Must not be irrelevant to the original resolution;
Must not be redundant or incompatible in that it negates the resolution or relates to something that has already been voted on; or
Is not vexatious and an attempt to disrupt the valid proceedings of the meetings.
The chair may rule the amendment out of order under powers contained in the Articles.
The Act requires that the precise text of a SPECIAL resolution be set out in the notice of the meeting. As a result amendments are only permitted to correct obvious grammatical or clerical errors which do not change the substance of the original resolution.
What is the process for amending an ordinary resolution?
If a proposed amendment is allowed, the meeting should first vote on whether or not to allow the amendment and then there must be second vote on the resolution itself – in the original or amended form depending upon the result of the first vote.
Where multiple amendments are proposed and allowed in respect of the same resolution they must be voted upon in the order they are proposed with the final vote on the substantive resolution including any amendments agreed by the meeting.
Can you withdraw a resolution and what is the process?
The director will simply notify the meeting that the resolution is withdrawn and will not be proposed.
Where this is known in advance a listed company should make an announcement together with details of the reasons for the withdrawal.
Withdrawal or amendments to resolutions must take place before the resolution is voted by the members.
EXAMPLE TO USE IF REQUIRED
During the initial stages of the pandemic a number of listed companies withdrew resolutions to approve the declaration of a final dividend as the effect of the pandemic became clearer and preservation of cash resources became imperative.
What type of company must hold an AGM?
Public - private companies are no longer required to hold an AGM unless their articles state otherwise.
What type of standard business will take place at an AGM?
Receive reports and accounts
Declare Dividend
Election and re=election of directors
Reappointment and remuneration’s of auditors
In quoted companies, approve the directors remuneration report and remuneration policy.
What is a class meeting?
Class meetings are meetings of the holders of a class of the company’s shares, and must be held when any class rights are to be varied.
