P3 - 14. Meetings of shareholders and members

Question 1

Can any member request that a resolution be circulated?

Answer 1

No. The member or members must hold between them not less than 5% of the voting rights at a general meeting

Question 2

Who has the right to exercise the voting rights on a written resolution?

Answer 2

The registered member

Question 3

On what basis can members of a public company approve a resolution other than at a general meeting?

Answer 3

By proxy or by unanimous written resolution under the duomatic principle

Question 4

Under what circumstances must a private company hold an AGM?

Answer 4

If it is a quoted company or required by its Articles

Question 5

What additional resolutions would a quoted company routinely add to its AGM notice?

Answer 5

Receipt of directors’ remuneration report,

approval of directors’ remuneration policy (triennial),

authority to issue shares,

waive pre-emption rights on allotment,

authority to purchase own shares,

approval of political donations, and authority to convene general meetings on 14 days’ notice

Question 6

Which documents should be available for inspection by members at an AGM?

Answer 6

Register of members
Directors’ service contracts
Notice

Question 7

Are amendments to resolutions allowed?

Answer 7

For ordinary resolutions only to correct obvious typographical mistakes, no amendments may be made to a special resolution

Question 8

Can members ask questions about anything?

Answer 8

At a general meeting any question relating to the business of the meeting, at the AGM of a quoted company questions may be raised on any topic, however, directors only need to ensure that questions relating to the business of the meeting are answered

Question 9

What does clear days mean?

Answer 9

Clear days excludes the date the notice of a meeting is given, or deemed given, and the date of the meeting.

Question 10

What must a traded company have done to allow members’ meetings to be held on 14 days’ notice?

Answer 10

Obtained consent at the previous AGM or a general meeting held since the previous AGM.

Question 11

Do notices of general meetings need to distinguish between ordinary and special resolutions?

Answer 11

Yes

Question 12

If one of two members refuses to attend general meetings can a meeting be held?

Answer 12

Under the Model Articles no but check the Articles

Question 13

What is the key difference between an ordinary and a special resolution of the members?

Answer 13

Ordinary resolution is approved by a simple majority and a special resolution requires a 75% majority

Question 14

What advantage does passing a resolution at a meeting have compared to the same resolution circulated as a
written resolution?

Answer 14

At a meeting the majority is of those voting and on a written resolution it is of the entire voting share capital

Question 15

Can proxies speak at meetings?

Answer 15

Yes

Question 16

Who has authority to adjourn a general meeting?

Answer 16

The chair

Question 17

What options does a corporate member have in order to cast their vote at a general meeting?

Answer 17

Appointment of corporate representative or appointment of a proxy

Question 18

What is the maximum period before a general meeting for the cut-off for the receipt of forms of proxy by the
company?

Answer 18

48 hours (excluding non-working days)

Question 19

How many proxies can an individual member appoint?

Answer 19

As many as they like but proxies must represent different shares

Question 20

Can a member appoint more than one proxy?

Answer 20

Yes

Question 21

Can proxies vote both for and against the same resolution?

Answer 21

Only if they represent different members or different shares of the same member

Question 22

If a member’s proxy does not attend the meeting are their votes still counted as recorded on the proxy
appointment form?

Answer 22

No

Question 23

What, if any, are the practical differences between voting on a show of hands and on a poll?

Answer 23

On a show of hands each member has one vote on a poll each member has the number of votes attached to their shares
– usually one vote per share

Question 24

Must a chair always call for a poll?

Answer 24

If a poll is validly demanded by members, yes,

in other circumstances the chair has discretion but does have a duty to ensure that the sense of the meeting is correctly recorded

Question 25

If an abstention is a not a vote, why do some members insist on ensuring their abstention is recorded?

Answer 25

To demonstrate dissatisfaction

Question 26

In order to constitute a valid meeting, what must all attendees be able to do?

Answer 26

Participate in the meeting, to hear the speakers and to be able to ask questions

Question 27

How has digital voting promoted the use of poll voting as a matter of course?

Answer 27

Digital technology has enabled almost instantaneous vote count whereas a manual count can take hours

Question 28

Under the CA 2006 what is the presumption for private companies for members resolutions?

Answer 28

Written resolutions are the preferred option

Question 29

What are physical meeting reserved for (with regards to private companies)?

Answer 29

The few resolutions that are not permitted to be approved by written resolution or where the number or make-up of members makes obtaining their approval too difficult.

Question 30

What is the Duomatic principle?

Answer 30

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.

Question 31

The members of a private company may pass any resolution that could be put to a general meeting by written resolution (CA2006 ss. 282, 283, 288) except for which resolutions?

Answer 31

• remove a director under CA2006 s. 168; and
• remove an auditor under CA2006 s. 510.

Question 32

Written resolutions may be proposed by the directors using the procedure set out in which section of the CA 2006?

Answer 32

s.291

Question 33

What are the three main types of members’ meetings?

Answer 33

• annual general meetings (AGMs);
• general meetings (GMs); and
• class meetings of the holders of a particular class of the company’s capital.

Question 34

Whilst not being able to demand an AGM, how can private companies try and implement this?

Answer 34

Members of private companies holding 5% of the voting rights can requisition a general meeting (CA2006 ss. 303–305) and also have the right to requisition a written resolution (CA2006 ss. 292–295).

Question 35

Who must hold an AGM?

Answer 35

Every public company and every private company that is a traded company must hold an annual general meeting within the period of six months (nine months for a private traded company) commencing on its accounting reference date (CA2006 s. 336).

Question 36

Who has the authority to convene a general meeting including AGM’s?

Answer 36

Members may requisition a general meeting but not an AGM (CA2006 s. 303)
The court has power to order a general meeting to be held, including as an AGM.

Question 37

What is the routine at annual general meetings?

Answer 37

• Receiving the report and accounts laid before the meeting, as required by CA2006 ss. 437–8.
• The declaration of a final dividend, if any.
• The election or re-election of directors. (This will include both the election of directors who have been appointed since the last AGM and the re-election of directors who have retired by rotation, as required by the company’s Articles, the Act or the Governance Code.)
• The reappointment and remuneration of the auditors.
• Quoted companies must put a non-binding resolution at the meeting that receives the audited accounts for the approval of the directors’ remuneration report (CA2006 s. 439).
• Quoted companies must put a resolution at the meeting that receives the audited accounts for the approval of the directors’ remuneration policy at intervals of not more than three years or to approve the adoption of a new remuneration policy (CA2006 s. 439A).

Question 38

Apart from the routine business as noted above, which other resolutions may be put to the members?

Answer 38

• special resolutions for any proposed alterations to the company’s Articles (CA2006 s. 21);
• ordinary resolution granting authority to the directors to issue additional shares (CA2006 s. 551);
• special resolution to disapply pre-emption rights on the issue of new shares (CA2006 s. 571);
• ordinary resolution to authorise the directors to offer shareholders the right to receive new ordinary shares instead of
  cash for all or part of any dividend; and
• ordinary resolution to give general authority to make political donations (CA2006 s. 366).

Question 39

When would a member have the right to propose a resolution to be put at an AGM to appoint a person as a director?

Answer 39

If that right is contained in their Articles. There is no such provision in the Act or the Model Articles.

Question 40

What are class meetings?

Answer 40

Meetings of holders of a certain class of the company’s capital

Held in accordance with the Articles of the company or conditions that attach to the shares concerned.

Question 41

When are class meetings required?

Answer 41

Whenever the rights of the holders of the class are to be varied because of some action proposed by the
company.

Question 42

List some variation of class rights

Answer 42

Change in voting, dividend or other rights attached to the class

Proposed changes in a reorganisation of the company’s share structure

Question 43

Where a class has no rights to vote, what does that refer to?

Answer 43

Right to vote at a general meeting not to a class meeting.

Question 44

What are the rules for holding a general meeting?

Question 45

What are the rules for holding a class meeting?

Answer 45

No general power for members of a class to requisition a class meeting (CA2006 ss. 334 and 335).

s.334 - quorum wherea class meeting has been convened for a variation of class rights shall be two members holding at least one-third in nominal value of the shares of that class and that at such an adjourned meeting the quorum shall be one member holding shares of that class.

Question 46

Convening general meetings sections and MA?

Answer 46

ss.302 – 306
Plc Model Articles – 28

Question 47

Notice of general meetings

Answer 47

ss. 160, 283, 307–313, 325, 337, 360,
USR1985 s. 41

Question 48

Quorum at general meetings sections and model articles?

Answer 48

s. 318
Ltd Model Articles - 38, 41
Plc Model Articles - 30, 33

Question 49

Proceedings at a general meeting sections and MA?

Answer 49

ss. 319–323, 341–351
Ltd Model Articles - 37, 39–41, 44, 47
Plc Model Articles - 29–33, 36–39

Question 50

Right to appoint a proxy sections and MA?

Answer 50

ss. 282–284, 324, 331
Ltd Model Articles – 45,46

Question 51

Use of electronic communications for general meetings sections and MA?

Answer 51

ss. 293, 299 , 308, 309, 333–333A, 430, 1145, sch 5 paras 4 & 9
Ltd Model Articles – 48

Question 52

Voting at general meetings sections and MA?

Answer 52

ss. 282–287, 360A–360B
Ltd Model Articles – 42,43,44
Plc Model Articles – 34,35,41

Question 53

Things a CoSec should do prior to the AGM

Answer 53

The AGM must be held no later than six months after the financial year-end (nine months for a
private company).
The notice and accompanying documents should then be sent 21 days (clear notice – not
including the day of posting and day of the meeting) in advance of the meeting, 20 business
days for a listed company to comply with the UK Corporate Governance Code.

The notice should be sent to all eligible members, the auditors and personal representatives
of deceased shareholders.

If there is any unusual business to be dealt with at the AGM, an explanatory circular should
be sent to members.

Forms of proxy should be sent with the notice and accompanying documents.

Forms of proxy should normally be returned 48 hours before the meeting commences (this
period cannot be extended).

Notice of a resolution proposing to remove a serving director or auditor or appoint a new
auditor must be given 28 days in advance of the meeting.

The company secretary will normally prepare a script to cover the running order of events for
the chair at the meeting.

The company secretary should prepare appropriate wording for procedural resolutions for
use by the chair in the event of disruption, too many attendees, adjournment, etc.

The company secretary should have a run-through of the arrangements with the chair.
Planning meetings should also be held with any other members of staff providing support at
the meeting or any external party (for example the scrutineer).

If it Is likely that shareholders will ask questions of the director, it may be helpful for the
company secretary to co-ordinate a list of the likely questions and answers for the directors
to consider.

Listed companies will be required to release an announcement following the meeting in
respect of the results of the resolutions. The company secretary should prepare a draft of the
announcement for updating following the meeting.

Question 54

Things a CoSec should do prior to the AGM – meeting venue related?

Answer 54

• Make sure venue is booked in plenty of time and visit the venue beforehand.
• Estimate how many will attend the meeting.
• Ensure that the venue complies with health and safety regulations.
• Ensure that you will have access to the room in plenty of time in advance of the meeting to
  arrange for logistics and setting up of equipment.
• How will the room be laid out?
• Who will sit at the top table?
• Is a stage required for the platform party?
• Liaise with share registrar regarding the room layout and, in particular, member verification
  area and any audio-visual requirements especially if electronic voting to be used.
• Will sound and vision equipment be required?
• Is security for the board required?

Question 55

Things a CoSec should do on the day of the AGM

Answer 55

1. Ensure copies of all documents, including the agenda, are available.
2. The company secretary, or another appropriate person tasked to do so, will take the minutes of the meeting.
3. The company secretary should bring a copy of the articles of association to the meeting.
4. The company secretary should ensure that the display documents are available at the
   meeting:
   * financial reports and accounts;
   * register of members; and
   * directors’ service contracts or terms of appointment of non-executive directors.
   * The directors’ service contracts/terms of appointment must be available for inspection by members from 15 minutes before the meeting commences until 15 minutes after the meeting finishes.
5. Unless attendance is being recorded by the share registrars all members should be asked to sign the attendance sheet on their way into the meeting.

Question 56

Things a CoSec should do during the AGM

Answer 56

1. Ensure a quorum is present and confirm this to the chair to open the meeting.
2. The company secretary should be prepared to read the notice if this is not taken as read.
3. All directors should attend and they should sit on the platform or in the front rows – they
   should wear name badges.
4. Attendance by other professionals – auditors, scrutineers, registrar, press (if allowed),
   external auditors, company lawyers etc. is at the discretion of the meeting and they
   should not be permitted to vote, unless they are also a member.
5. There is no requirement to read the auditor’s report but if this is company practice it is
   usual to restrict this just to the audit opinion paragraphs.
6. For quoted companies, the chair will normally read a statement reviewing the year’s
   affairs as well as a trading update. The text of this update must be released to the
   Stock Exchange in advance of the statement being read to comply with disclosure
   requirements.
7. The chair should allow time for members to ask questions during the meeting even
   where there is a specific Q&A session prior to the formal resolutions being put to the
   meeting. Members, as a courtesy to others, should state their name before asking their
   question.
8. The chair should explain the method of voting for resolutions. For larger companies the
   resolutions are often taken on a poll as a matter of course in which case there is no need
   for a show of hands. For smaller companies and especially private companies voting on
   a show of hands is the norm with poll votes being the exception.
9. Ensure that sufficient supplies of ballot papers are available if required.
10. Amending a resolution:
    * An ordinary resolution can only be amended if the amendment is reasonably within
    the scope of the original. The revised amendment wording must be approved by the
    meeting before it is then voted on.
    * An amendment cannot be allowed if it is a direct contradiction of the original
    resolution.
    * A special resolution cannot be amended at the meeting.
11. Polls can be demanded at the meeting in accordance with the Articles. Model Article
    44 (public company Model Article 36) provides that a poll may be demanded by at least
    two persons (e.g. members or proxies) with the right to vote on the resolution. A poll
    may also be demanded by members representing at least 10% of the voting rights or
    members having at least 10% of the shares with voting rights. The chair of the meeting
    or the directors may also demand a poll. The company secretary will often oversee the
    process, in conjunction with the share registrars, if any.

Question 57

Things a CoSec should do after the AGM

Answer 57

1. The company secretary should collect all books and papers left by directors.
2. Arrange for copies of approved resolutions, that require registration, to be filed on time with
   the Registrar.
3. Listed companies must make a market announcement via an RIS of all resolutions, other
   than ordinary resolutions at an AGM, approved by the shareholders at a general meeting (LR
   9.6.18).
4. Listed companies when announcing the voting results should explain what action(s) are
   intended to be taken to consult with shareholders in circumstances where there is a vote
   representing 20% or more against the recommendation of the directors.
5. Minutes should be prepared promptly for approval by the chair of the meeting.
6. Organise the payment of the dividend, if approved, at the meeting.
7. Traded companies must confirm receipt of any votes submitted electronically on a poll as
   soon as reasonably practical after the votes has been received (CA2006 s. 360AA).

Question 58

Are proxies entitled to speak at the meeting?

Answer 58

Yes – this includes demanding or joining in the demand for a poll vote on any resolution (CA2006 ss. 324 and 329).

Question 59

When can a general meeting of a traded company be held on 14 days notice?

Answer 59

These conditions are:
* the meeting is not an AGM;
* members are offered an electronic voting facility; and
* a special resolution has been passed to reduce the notice period to 14 days. This must have happened at either the immediately preceding AGM or at a general meeting held since the last AGM.

Question 60

What is the notice period for a general meeting of a private company (other than an adjourned meeting)?

Answer 60

Must be called by notice of at least 14 days

Question 61

What is the notice period for a general meeting of a public company (other than an adjourned meeting)?

Answer 61

(a)in the case of an annual general meeting, at least 21 days, and
(b)in any other case, at least 14 days

Question 62

What are the requirements for a shorter notice period of a general meeting?

Answer 62

Agreed to by a majority in number of the members having a right to attend and vote at the meeting

Question 63

What is s.307 (5) of the CA 2006?

Answer 63

The shorter notice must be agreed to by a majority in number of the members having a right to attend and vote at the meeting, being a majority who—
(a)together hold not less than the requisite percentage in nominal value of the shares giving a right to attend and vote at the meeting (excluding any shares in the company held as treasury shares), or

(b)in the case of a company not having a share capital, together represent not less than the requisite percentage of the total voting rights at that meeting of all the members.

Question 64

What is s.307 (6) of the CA 2006 (agreement to short notice of meeting)?

Answer 64

The requisite percentage is—
(a)in the case of a private company, 90% or such higher percentage (not exceeding 95%) as may be specified in the company’s articles;

(b)in the case of a public company, 95%.

Question 65

What are the three conditions that must be met in order for a traded company to have a notice period of at least 14 days?

Answer 65

Condition A is that the general meeting is not an annual general meeting.

Condition B is that the company offers the facility for members to vote by electronic means accessible to all members who hold shares that carry rights to vote at general meetings. This condition is met if there is a facility, offered by the company and accessible to all such members, to appoint a proxy by means of a website.

Condition C is that a special resolution reducing the period of notice to not less than 14 days has been passed—
(a)at the immediately preceding annual general meeting, or
(b)at a general meeting held since that annual general meeting.

Question 66

What is the notice period for a traded company, when conditions A-C s.307a are not met?

Answer 66

At least 21 days

Question 67

What is the entitlement of notice of general meetings?

Answer 67

Subject to any provisions in the company’s Articles, notice must be given to every member and director (CA2006 s. 310).

Question 68

Who does not have a right to receive a copy of the notice or attend general meetings?

Answer 68

CoSec

Question 69

Who does not have a right to receive notice of general meetings?

Answer 69

Holders of preference shares or non-voting shares

Question 70

For a class meeting who is entitled to the notice of general meeting?

Answer 70

Only the holders of those shares

Question 71

In practice, particularly in listed companies notices will usually be sent to who?

Answer 71

Every holder of shares or debentures, whether or not the registered address of the holder is in the UK and irrespective of whether the securities held entitle that member to vote at the meeting.

Question 72

What must the notice of general meetings state?

Answer 72

Time, place and date of the meeting, and the general nature of the business to be transacted (CA2006 s. 311).

Question 73

What is the provision of the Listing Rules (LR 9.3.6, 7) listed companies must follow in regard to proxies?

Answer 73

Every member must be given the opportunity to vote for, against or abstain on every resolution included in the notice (the so-called three-way proxy).

Question 74

What is s.337 of the CA 2006?

Answer 74

The notice of an AGM of a public company must state that the meeting is to be an AGM.

When must special notice of certain ordinary resolutions be given to the company under (CA2006 s. 312)?
* resolution to remove an auditor before the expiration of their term of office (CA2006 s. 510); and
* under CA2006 s. 168, resolutions:
– to remove a director before the expiration of their period of office; and
– to appoint somebody in place of the director removed at the meeting at which they are removed

Question 75

How far in advance, where special note is required, must it be given to the company?

Answer 75

At least 28 days prior to the meeting

Question 76

What is s.318?

Answer 76

Quorum at meetings

Question 77

What is the quorum for a company with a sole member?

Answer 77

Quorum is one

Question 78

What is the quorum for a company excluding those with a sole member?

Answer 78

Subject to any provisions in the company’s Articles, two members present in person or by proxy may constitute a quorum.

Question 79

What do the Model Articles state in circumstances where quorum is not present?

Answer 79

if a quorum is not present within half an hour, the chair must adjourn the meeting and must either specify the time and place for the adjourned meeting, or state that the meeting will continue at such time and place as the directors may decide.

Question 80

What do the Model Articles provide if quorum ceases to exist after the meeting has commenced?

Answer 80

The meeting is automatically adjourned (Model Articles Plc reg. 39, Ltd reg. 39).

Question 81

How are member resolutions passed?

Answer 81

Approved as ordinary resolutions or special resolutions with a different majority required for each.

Question 82

With regards to a written resolution, how is the majority required to approve any particular resolution determined?

Answer 82

Reference to the total votes held by those attending, either in person or by proxy, and voting on each resolution.

If members present at a meeting do not vote on every resolution those resolutions will have a different majority requirement.

Question 83

What is required to pass an ordinary resolution at a members meeting?

Answer 83

A simple majority of those present and voting is all that is required where the vote is undertaken on a show of hands where each member present has one vote.

Question 84

Examples of ordinary resolutions?

Answer 84

• appointment or re-appointment of directors;
• re-appointment of auditors;
• alterations to the share capital under CA2006 ss. 617 and 618;
• a capitalisation of profits;
• the grant of authority for the allotment of securities (CA2006 ss. 550 and 551); and
• subject to provision in the Articles, a resolution authorising the directors to offer shareholders the right to elect to new ordinary shares for the whole or part of a cash dividend.

Question 85

How many days’ notice are required for a notice of meeting that is intended to propose a special resolution?

Answer 85

14 days notice (21 days for a traded company)?

Question 86

Examples of special resolutions?

Answer 86

• alteration of the Articles (CA2006 s. 21);
• change of name (CA2006 s. 77);
• disapplication of pre-emption rights (CA2006 s. 571); and
• reduction of capital (CA2006 s. 641).

Question 87

What is the role of the chair at a members meeting?

Answer 87

Ensure that the meeting is properly and fairly conducted

Question 88

What powers do the companys articles usually give the chair relating to the conduct of meetings?

Answer 88

• authority to adjourn the meeting;
• rule on points of order;
• decide upon the validity of votes;
• declare the results of resolutions on a show of hands;
• eject members from the meeting for unruly behaviour;
• decide upon the validity of amendments proposed for resolutions; and
• demand a poll.

Question 89

What is a procedural motion?

Answer 89

Motions that are used to regulate the conduct of the business of the meeting

Question 90

Who is entitled to speak at meetings?

Answer 90

All members, proxies and corporate representatives who are entitled to attend and vote at a members’ meeting

Question 91

What is a three-way proxy?

Answer 91

Includes provision for members to indicate which way they wish the proxy to cast their votes or to abstain from voting in the event of a poll being demanded.

Question 92

What is a poll?

Answer 92

The process by which members vote at a general meeting and the number of votes each member or their proxy can cast is calculated by reference to the number of shares the member held on the record date.