Rights and Remedies of Shareholders Flashcards

1
Q

How do the Articles act as a contract, and who for? What provision?

A

S33 Company Act 2006 - they regulate the relationship between members and each other and between members and the company

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2
Q

What is the effect of the s33 provision between members?

A

Members can sue if their membership rights are infringed.

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3
Q

What is the remedy for a breach of s33 CA 2006?

A

Usually damages.

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4
Q

Are membership rights clear?

A

No, case law establishes most of these rights

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5
Q

What are 4 membership rights enforced under s33?

A

1) Right to a dividend
2) Right to share in surplus capital on winding up
3) Right to vote at meetings
4) Right to receive notice of GMs and AGMs

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6
Q

Can rights that are not S33 be enforced?

A

No

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7
Q

What is the example of the Solicitor Case in Eley?

A

Provision that plaintiff would be company solicitor in the Articles. Never appointed as Articles even though he became a member. Court held he could not sue under s33 as this was not a membership right.

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8
Q

What advice would you have given the solicitor in Eley or anyone else in his position?

A

Write out your rights in a separate contract, such as a Shareholders Agreement, and not in the Articles, as it likely will not be enforceable.

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9
Q

What type of provisions can be outlined in a Shareholders’ Agreement?

A

1) Unanimous voting over certain matters (e.g. removing a director)
2) Quorum for GMs
3) Dividend policy
4) Allotment of new shares, and
5) New and departing shareholders

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10
Q

Who is a Shareholder’s Agreement a contract between?

A

The shareholders

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11
Q

Do Articles deal with shareholders’ personal rights and obligations?

A

No, as it is a contract between the company and shareholders in their capacity as shareholders

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12
Q

When should shareholders not agree to an SA?

A

If it has provisions that restrict it from exercising its statutory powers

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13
Q

What is the difference between Articles and Shareholders Agreement?

A
  • Articles: between company and shareholders, doesn’t concern personal rights
  • Shareholders: between shareholders, can concern personal rights and obligations
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14
Q

Can Articles be enforced by one shareholder to another shareholder?

A

No

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15
Q

Who is a Shareholder Agreement enforced by and against who?

A

One shareholder to another shareholder

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16
Q

How is a Shareholder’s Agreement enforced?

A

In the usual way under general contract law principles

17
Q

What remedies are available for Shareholder Agreement breach, typically?

A

Same as those for a breach of contract, in addition to an injunction to prevent breach of terms of an agreement

18
Q

How can an injunction be used in a Shareholder’s Agreement?

A

To prevent a breach of a term by another shareholder that is party to the agreement

19
Q

What happens if an Agreement is breached and the Shareholder’s vote for something they shouldn’t have? I.e. Removal of Director?

A

The Company is not bound by the Shareholder’s Agreement.

20
Q

Although the Company is not bound by Shareholder’s Agreement, what will happen in the event of a breach?

A

The Shareholder / Director can bring a claim against shareholders for the breach in the Law of Contract.

21
Q

What rights does a shareholder with 5% or more have?

A
  • Require directors to call GM
  • Require circulation of written statements regarding proposed resolutions to be considered at GM
  • Circulate a written resolution
22
Q

What rights does a shareholder with 10% more have?

A

Demand a poll vote

23
Q

What rights does a shareholder with over 25% have?

A

Block a special resolution

24
Q

What rights does a shareholder with over 50% have?

A

Pass or block ordinary resolution

25
Q

What rights does a shareholder with 75% or more have?

A

Pass a special resolution