Members Flashcards
Time required to call a GM on full notice
14 clear days
Day notice given and day of meeting not counted
Who to send notice to when calling GM on full notice
S310- every member and director
S520- also all appointed auditors
Format of notice for GM
S308- can be hard copy or electronic
S283(6)(a) special resolution at GM
Full text must be presented at GM
Leg to add 48 hours to notice so document is deemed to be received 48 hours after it was send
S1147
How to call a GM
Directors must pass board resolution and give notice
Quorum not applicable if board meeting only to call a GM
How can shareholders call a GM
S305- shareholders may do it if they have more than half total voting rights in company
Must hold 5% paid up share capital to do this
S303- first must ask directors to call one
Directors must pass a resolution in 21 days otherwise shareholders can demand a GM
How can auditors call a GM
S519- May call a GM on their resignation
Must provide a statement of circumstances
Distribution of votes in show of hands
Every shareholder has one vote each S284(2)
Distribution of votes in poll
One vote for every share they own S 284(3)
What if a show of hands is not a majority
A poll can be demanded S321(1)
When must a poll vote happen
If requested by Chairman Directors any two shareholders or any shareholder with 10% shares
How to file a special resolution
S30- file copy of special resolution at CH within 15 days
S355(1) keep records of resolutions passed at GM for 10 years at registered office
Leg allowing a GM to be called on short notice
S307(4) if members agree
Requirements to call a GM at short notice
Majority of members with right to attend and vote agree S307(5)
AND
These shareholders must hold 90% of voting rights between them S307(5)(a)
What can a written resolution NOT be used for
To dismiss a director
To dismiss an auditor
These need a GM
Distribution of votes for written resolution
1 vote per share unless articles state otherwise
How to create a written resolution
Directors pass board resolution to initiate the procedure S291(1)
Or shareholders can requires one with a statement - must have at least 5% of voting shares- S292(3)
Must be circulated to all members entitled to vote S292(2)
Send statement explaining how to agree and deadline
How to pass a written resolution
Must be passed within 28 days of circulation date
S296(1) to agree members must provide authenticated document identifying resolution and agreeing
S30- file copies with the registrar within 15 days
S355(1)- keep copy for ten years in registered office
How to change the company articles
S21- special resolution
S26- send to registrar within 15 days
Decision effective immediately after resolution passed
How to change the company name
Special resolution
S78- notice to registrar 15 days
Form NM01
S81- new name takes effect on date new certificate of incorporation issued
2 cateogories of shareholder decision
Decisions S makes that once decided D cannot revoke or refuse
Decisions where S give D permission
How many votes needed for ordinary S res
Over half
How many votes needed for special S res
75% or over
Ways to pass an S res
In meeting or in writing
How are GM called
Board res passed
Notice 14 clear days poss plus 48 hours
When must 48 hours be added to 14 clear days notice for GM
If notice by email or post assume recieved 48 hours after it is posted or emailed
Must companies hold a Gm every year
Public companies must
No such requirement for private companies
Do companies formed under CA2006 hold AGM
No not unless articles
Who must Ds give notice of GM to
All S
All D
Auditor
What format can GM notice take
Paper or electronic
What must be included in GM notice
Date time and place
General nature of business
If special res include the extract wording and Ss right to a proxy
Quorum at GM
2 unless only 1 S and then 1
How is votes cast at GM
Show of hands
Each S has one vote each
2 situations where S vote doesn’t count at GM
A res to buy back their shares
An ordinary res to ratify their breach of duty as a D
If individual is D and S and has interest in matter can they vote and count in quorum
No in board meeting but yes in GM
How are votes counted in poll vote
One vote for each share
Not one per S
When can a poll vote be demanded under MA
Chair demands it
Ds demand it
2 or more persons with right to vote on res demand it
Person or persons representing not less than 1/10 of total voting rights of all the Ss having the right to vote on the res
At what point in the meeting can a poll vote be demanded
Before or during meeting either before or after vote
Does a poll vote override show of hands
Yes
When can a GM be held on short notice
A majority of Ss who between them hold 90% or more of voting shares consent
95% for public companies
Once percentage consent it can be held immediately
Can S pass written res
Private companies can but public companies cannot
When can S require a GM
If they have 5% paid up share capital
Request must state general nature of business
How long do D have to call a GM when S request it
Must call it within 21 days of request
Notice period 14-28 days
So max 21 plus 28 days
How are votes cast for written res
Each S has one vote for each share they own
When can an S require a written res
S with 5% of voting rights can require written res
Articles can reduce this 5% but cannot increase it
When S request written res how long do D have to circulate it
Must circulate it within 21 days of request and S may be required to pay
Types of shares
Ordinary - vote, attend GM, dividends
Preference: cumulative, non-cumulative and participating (receive profits or assets in addition to preference share rights)
Can there be different types of ordinary shares
Yes and details are in articles otherwise they all rank equally
What if there is a breach of the constitution
Constitution is a contract between S and S
And S and company
So remedy for breach of contract
Who does a shareholder agreement bind
Only those S who choose to enter into it
What can a shareholder agreement not do
Restrict an S who is also a D from voting a particular way at a board meeting
Is a shareholder agreement private or public
Private
Is there a remedy for breach of shareholder agreement
Yes
Rights of S
Attend GM and vote
Send proxy to GM
Poll vote
Notice of GM
Apply to court to call a GM if not able to call one otherwise
Dividend
Remove D and auditor by ordinary res
Circulation of a written statement of up to 1000 words regarding any res or business to be dealt with at GM
Receive a copy of annual accounts and reports
Injunction to prevent breach of constitution
Can S circulate a written resolution and statement
Only if they hold 5% or more of shares
Can S have company wound up
Yes by applying to court on grounds it is just and equitable
What can S inspect without charge
Mins of GM S res passed other than at GM All statutory registers Ds service contract and indemnities Any contracts relating to company’s purchase of own shares
What is a corporate S
How are they represented at GM
An S that is a company
They appoint a person to represent it at meetings
When is a company a subsidiary
When it is a subsidiary of another subsidiary
Holding company had majority of voting rights
Holding company is member an can appoint or remove majority of Ds
Holding company is a member and controls alone, persuant to agreement with other members, a majority of voting rights
What is a wholly owned subsidiary
No members except one company and it’s wholly owned subsidiaries
What is a single member company
Only one shareholder
What must you do if your company is a single member company
State this on S register and update it if the situation changes
Offence not to do this
What info should be recorded on S reg if shares are held by 2 or more individuals jointly
Record both names but one address
Offence to breach this
Who appoints or removed secretary and decides the terms on which they hold office
Directors by board res
AP03 and AP04 to CH within 14 days
Do you need a register of secretaries
Yes but private companies can elect to file on to central reg at CH instead
Do all companies need a secretary
Public companies must have one
Private companies - optional
Is a secretary paid
Not always paid
Who does the job of a secretary of there is no sec
D or someone else authorised by D
What kind of authority does a Sec have
Apparent authority to enter into administrative contracts but not trading contracts
What to do when a sec resigns or is removed
Use form TM02 to notify CH within 14 days
Update register of secs
What if there is a change of info on sec register
Notify CH within 14 days using CH03 (human) or CH04 (corporate)
What does an auditor do
They prepare reports on annual account to be sent to S
Who appoints the auditor
D appoints the initial auditor and then S res after that
What must accountants confirm about accounts
That they have been properly prepared and give a true and fair view of company
Do auditors need to be re appointed each year
Auditors of private companies are deemed to be reappointed each year
Are all companies subject to audit requirements
No small companies are exempt from audit requirements
Dormant companies can file abbreviated accounts and are exempt from audit
Do auditors have a duty to care to S or potential S when conducting annual review
No - no proximity
Can auditors be sued for negligence
Only by party being audited
2 criminal offences for auditors
Knowingly or recklessly including deceptive or misleading material in auditors report
Omitting certain statements from the report which are required to be included
What is an unfair prejudice petition
When S apply to court for a remedy because they feel they have been unfairly prejudice as an S
Grounds of an unfair prejudice petition
An actual or proposed act or omission is or would be prejudicial
The company’s affairs have been conducted in a manner that is unfairly prejudicial to the interests of S
Who can make an unfair prejudice petition
S
What kind of order can a court make for an unfair prejudice petition
Any order they think fit
What is the test to determine an unfair prejudice petition
Objective test
Conduct must be prejudicial in that it causes harm to S and is unfair
What are derivative claims
A claim instigated by S for a wrong done to a company which has arisen from act or omission of D
When board refuses to take action it allows S to do it instead
Need permission to progress with claim
Who is the claimant in a derivative claim
Company
Who is the defendant in a derivative claim
Director
What actions can a derivative claim be brought in relation to
Actual or proposed act or omission involving negligence, default, breach of duty or breach of trust
When will the court give permission for a derivative claim to continue
When the evidence disclosed a prima facie case for continuing
Who pays for a derivative claim
If permission is refused S must pay costs
If permission is granted company meets costs of claim plus S expenses if unsuccessful
When will the court refuse permission for a derivative claim to progress
S isn’t promoting success of company
Act or omission have been authorised or ratified by company
What will the court take into account when deciding if a derivative claim will progress
Obliged to have regard to views of S with no personal interest in the matter
If S is acting in good faith
Is there an action S could persue in their own right
Importance someone acting in good faith to promote success of company would attach to claim
