SGS 2: Company Decision Making Flashcards
1. describe the basic procedure a company must follow to make and implement decisions where shareholder approval is required; 2. understand options that could be implemented in order to develop an organisation’s business; 3. identify where specific legal input would assist with the implementation of a particular business strategy; and 4. understand how and why company group structures are used.
What are the 4 key questions that need to be asked regarding the decisions a company should make?
- Which changes are required
- Identify these changes from the CA / company articles - decisions of shareholders (OR / SR) or D’s
- Meeting requirements
- Produce the procedure plan
Generally what will happen in BM1?
- MA3: the directors have the general power to carry out the business of the company
- S177(1): does the director have to declare an interest in the transaction?
- NQAV
- Voting > Board Resolutions can be passed via simple majority (MA 7(1)) or unanimity - MA8.
- Chairman can have the casting vote - check articles, MA 13(1). If person abstains, then will not count them as a voter
- Agenda - depends on the companys issues
What always has to be done in BM1 ahead of the GM?
- Call a GM - s302
- Approve notice of GM
- Instruct secretary
- to send out notice and any other necessary documents
▪ E.g. Memorandum detailing loan agreement/service contract/proposed SPT/buyback - Close / adjourn
What is the purpose of the GM?
- To approve transactions / changes proposed in BM1
- N: must notify s/h - s307
- Private: 14 days notice
- Public: 14 days, but for an AGM 21 days
- Short notice - under s307(4)(5)(6) where agreed by members
- Private - 90% or over 95% when specified in AoA
- Public - 95%
- Number - clear days - not counting the day of notice or day of GM: s360(2)
Who must receive the notice of the GM?
- Every member
- Every director -S310(1)
- Must state date / time and the place of the meeting - s311(1)
What is the quorum of a GM?
- 2: s318(2), or 1 if there is only one member - s318(1): would have to check articles
- Where the shareholder is a company, can authorise representatives for meetings - s323(1) + check articles
How does voting work during the GM?
- Voting: show of hands, unless poll is demanded (MA 42)
- MA 44(1) - poll is demanded before, or during meeting
- MA 44(2) - those with not less than 10% of voting rights of those entitled to vote can demand one
- Agenda - depends on company issue
- Close meeting
What happens during the BM2?
- Note any resolution passed at the GM
- NQAV
- Agenda: always Board Resolutions
• Implement the decisions that were made
• Instruct the company secretary to deal with the PMMs - Close meeting
What are the Post Meeting Matters?
MR MRS
Minutes of BM - s248
Returns to CH
Minutes of GM - s355(1)(b)
Registration - members / directors / secretaries
Share Certificates where sold/ bought/ transferred etc - s769 and 776
In the PMMs, what returns to Companies House need to be made?
- All SRs: s30(1)
- Some OR, e.g. the allotment of shares - s551(9)
- Form AP01 / TM01 etc.
- Articles, where amended - s26
- Fee
What 4 main changes need to happen to appoint a new director?
- Directors resolution - MA 17(1)(b)
- Would be a BM, with a BR
- Voting: more than 50% show of hands
What 4 main changes need to happen for a long term service contract?
- Shareholders resolution - s188
- GM
- OR - s188(2), bc not specified unless otherwise required by AoA - s281(3)
- More than 50% - s282(1)
- Show of hands, but can request poll - MA 44 s321
What are the main changes for a change in company name?
- Shareholder resolution - s77(1)(a)
- GM
- SR - s77(1)(a)
- Not less than 75% - s283(3)
- Show of hands, but can request a poll: MA 44
Where is the definition of a subsidiary found?
- S1159
What are the 3 reasons that one might create a subsidiary company?
· Tax reasons
· Isolate risk – others can carry on less affected if one goes bust (unless guarantor)
· Easier to sell off – as a SLE
Each Company has separate liability and separate management. Where a PLC is the sole shareholder of a subsidiary, Ds of the PLC have authority to make SH resolutions for the subsidiary.
