Nature of Company Meeting - Chapter 1

Question 1

Explain Sharp vs Dawes 1876

Answer 1

Sharp vs Dawes gave the definition of a meeting as the coming together of two people for a legal purpose. There are some exceptions to this rule:

1) Class Meeting - East vs Bennett where the same person hold all the shares in that class
2) The Court has statutory power
3) A single member of a private company

Question 2

What is a quorum normally set at?

Answer 2

Two unless the articles say otherwise

If the articles are silent then company’s act applies

Question 3

Can a meeting be held face to face or electronically?

Answer 3

Yes both by the companies act and by law

Question 4

In what circumstances may only one person form a quorum for a meeting?

Answer 4

a) a privated non trading company
b) a class meeting where one person holds all the shares in that class - east vs bennett
c) by order of the court

Question 5

What is the statutory timetable for holding an AGM?

Answer 5

For a PLC it is within 6 months of the accounting reference date (which is the anniversary of the last day of the month when the company was incorporated - this date can be changed by notifying companies house). You must give 21 days notice and hold the meeting within 28 days and specify it is an AGM in the notice.
For a private trade company it is within 9 months.

Question 6

In what circumstances must Directors call an GM?

Answer 6

a) if 5% or more of the shareholders net assets in a trade company or 5% of the shareholders in a non trading company request it. 21 days notice 28 days to hold meeting
b) if an auditor requests it upon resigning 21 days notice 28 days to hold meeting
c) if the directors become aware that the net assets fall below 50% of the called up share capital 28 days notice, 56 days to hold meeting
d) the court order it

Question 7

For how many members must directors call a GM?

Answer 7

If 5% or more of the shareholders net assets in a traded or 5% of shareholder request it in a non traded.

Question 8

In what circumstances may the court order a GM be held?

Answer 8

If a member or director apply to the court for wrongdoing such as Hogg vs Cramphorn 1967 where they issued shares to prevent a takeover and the court decided this was wrongful. Also if there was only one surviving member such as a plane crash. Also if it has two members and one refuses to meet. Any director or member can apply to the court.

Question 9

How may the necessary consent of holders of a class of shares be obtained for a variation of the rights attached to their shares?

Answer 9

You must call a preliminary meeting to set out the variant and then a class meeting to agree to the variant. 3/4 of those attending or those holding that class (dependent on the articles) need to vote for the variant. If 15% disagree they can apply to the court within 21 days. Section 630 sets out procedure - an alteration of the articles is a variation of class rights in itself. It is difficult for the 15 percent to prove that a variation by such a large majority is unjust but in the of Holders Investment Trust it was shown that it was unfair as they were seeking advantages to themselves as members of another class.

Question 10

How may members requesting the holding of a GM overcome failure of directors to call a meeting?

Answer 10

They can call a meeting within 3 months of notice and the company must pay expenses.

Question 11

What is the most common reason members may request a GM?

Answer 11

To remove a director from office by ordinary resolution.

Question 12

What would happen if directors didn’t call a GM when they were meant to?

Answer 12

They are liable for the company’s debts and may be disqualified from directorships

Question 13

When is a public company compelled to call a GM?

Answer 13

Directors must call a general meeting if:

a) more than 5% of the shares net assets request it or 5% of voting shareholders
b) if an auditor resigns and requests it
c) if the directors become aware that the net assets fall at 50% or below the company’s called up share value (28 notice, 56 days)
d) the court order it. Hogg vs Cramphorn where they issued shares to prevent a takeover

Question 14

Explan East vs Bennett bros?

Answer 14

Class Meeting - This is the exception case referring to the definition of a meeting as this is the case where they held all the shares in one class. You can obtain written consent from this person then a meeting need not be held.

Question 15

In what circumstances must a director call an AGM?

Answer 15

The directors of a plc must call an AGM within six months after each accounting reference date and must specify it is an AGM in the notice. A private traded company must hold within nine months after each accounting reference date.
If a director fails to call an AGM they are liable to a fine.
The AGM of a company is the one occasion each year where the directors must appear in front of the shareholders.

Question 16

Explain Hogg vs Cramphorn 1967?

Answer 16

This is the case where the directors issued shares to dilute the value of stock to prevent a hostile takeover. This meant they could outvote mr Baxter who was trying to take the company over. A shareholder Mr Hogg sued. The court ordered they were breaching their fiduciary meeting to the company as shares can only be issued if ratified at a general meeting so ordered that a general meeting should be held to approve that this issue was not done for proper purpose.

Question 17

What are the two types of class meeting?

Answer 17

A) if the company have more than one type of share such as ordinary and preference
B) under the procedure for a scheme of arrangement where holders of the same share of class are separated into separate classes for whom different meetings must be held if the scheme proposed will affect each group differently.

Question 18

Explain young vs imperial club 1920 - failure to give notice of a meeting

Answer 18

The duchess of abercorn said she didn’t want to receive papers so none were sent. Mrs young was expelled and the court decided expulsion not valid as notice was not sent to every member.

Question 19

Draft a skeleton agenda for a AGM

Answer 19

BT pensions scheme management
Annual general meeting

Notice is hereby given that the sixth annual general meeting of the company will be held at Lloyds Chambers portsoken Street on 15 May at 2 PM for the following purposes

1) to receive the report of directors and the accounts for the year ended 31st of December 2014 and to
2) declare a dividend
3) to elect directors in place of those retiring
4) to reappoint the auditors and to authorise the directors to fix their remuneration
5) to consider and if thought fit pass the following resolution which will be proposed special resolution

That the articles of association of the company be altered by admitting there from article 93

By order of the board

12th of May 2014

Joanna lott
Secretary

Office address

A member entitled to attend and vote at the meeting is entitled to appoint a proxy or proxies to attend and vote instead of him. A proxy need not be a member of the company