Shareholders Flashcards
Which of the following is the correct threshold shareholding for a shareholder to give them the right to require the directors to call a general meeting?
(a)
5%
(b)
20%
(c)
25%
(d) 10%
(e)
1%
(a) 5%
An accountant has purchased some shares in a company on the basis that their accountancy firm would be instructed to prepare the annual accounts for the company. To be cautious the accountant required that a formal statement was inserted into the articles of the company to this effect. No other agreement was entered into on purchasing the shares or otherwise.
Which of the following statements would represent the correct advice to the accountant?
(a)
They would not have a claim under the articles as rights which do not relate to their membership are not enforceable under s 33 CA 2006.
(b)
The articles are only advisory so are not legally binding as between the accountant and the company.
(c)
Being appointed in a professional capacity to advise the board is likely to constitute a membership right.
(d)
They would have a claim under s 33 CA 2006 because the articles represent a contract between the company and the shareholders.
(e)
The court might imply terms into the articles in favour of the accountant if they can show such an implied term would create business efficacy.
(a) They would not have a claim under the articles as rights which do not relate to their membership are not enforceable under s 33 CA 2006.
You are advising a company on its incorporation. There are five directors who are all equal shareholders.
They want to ensure that none of them can be removed as a director without unanimous consent.
Which of the following statements represents the best advice to the shareholder/directors?
(a)
The shareholders should enter a shareholders’ agreement requiring unanimity to remove a director.
(b)
The company should make sure it is party to the whole shareholders’ agreement to ensure it is legally binding on both the company and the members.
(c)
A shareholders’ agreement would not necessarily be helpful as it could be amended with support of a simple majority of the shareholders.
(d)
The shareholders should amend the articles to require unanimity to remove a director.
(e)
There is nothing that they can do to prevent removal of a director by a majority of shareholders under s 168 CA 2006.
(a) The shareholders should enter a shareholders’ agreement requiring unanimity to remove a director.
Which is the correct threshold shareholding for a shareholder to give them the right to demand a poll vote?
10% or more
Which is the correct threshold shareholding for a shareholder to block a special resolution under s. 283?
Over 25%
Which is the correct threshold shareholding for a shareholder to pass or block an ordinary resolution under s. 282?
Over 50%
Which is the correct threshold shareholding for a shareholder to pass a special resolution under s. 283?
75%
You act for XYZ Ltd, a company with unamended model articles and five shareholders, all of whom are also directors. All of the shareholders hold 20% of the shares.
Three of the shareholders are unhappy with one of the directors and wish to remove them as a director. The other shareholder is not in favour of the resolution.
On the incorporation of the company all five of the shareholders signed a shareholders agreement stating that all shareholders must vote unanimously to remove a director.
Which of the following statements is correct about the resolution to remove the director?
(a) It will not be possible to pass the resolution to remove the director under s 168 CA 2006 because of the clause in the shareholders agreement requiring unanimity.
(b)
If the resolution is passed to remove the director, they will likely have a claim for breach of the shareholders’ agreement against the shareholders that voted for the resolution.
(c)
It will be necessary to check the articles to check there are no Bushell v Faith Clauses.
(d)
If the resolution is passed to remove the director, they will likely have a claim for breach of the articles against the shareholders that voted for the resolution.
(e)
The two opposing shareholders can block the resolution to remove the director.
(b) If the resolution is passed to remove the director, they will likely have a claim for breach of the shareholders’ agreement against the shareholders that voted for the resolution.
A company has received a notice from its shareholders which purports to be served under s 168 and s 303 of the Companies Act 2006 in order to move a resolution to remove a director.
The shareholders signing the notice together hold 10% of the shares of the company. If the company receives the notice today (Day 1) which of the statements is correct about the latest day on which the company can hold the General Meeting, assuming the directors want to co-operate with the Companies Act 2006 but also use all the time available to them?
(a)
Day 49
(b)
Day 51
(c)
Day 16
(d)
Day 50
(e)
Day 30
(d) Day 50
A company has received a notice from its shareholders which purports to be served under s 168 CA 2006 in order to move a resolution to remove a director.
The shareholders signing the s 168 notice holds 4% of the shares of the company. The company does not think that any of the other shareholders support this notice as the shareholder has a history of serving vexatious s 168 notices.
Which of the following represents the best advice to the board?
(a)
If the board chooses not to out this on the agenda, the shareholder can serve a s 303 CA 2006 notice requiring the directors to call a GM to consider the issue.
(b)
If the board chooses to put this on the agenda of a GM they will have 21 days to call the GM, and a further 28 days to hold it.
(c)
The board does not need to put this on the agenda of a GM to be considered.
(d)
If the board does not put this on the agenda of the GM, it will not need to tell the affected director.
(e)
The board has to put this on the agenda of the next GM.
(c) The board does not need to put this on the agenda of a GM to be considered.
A company secretary has received a letter of complaint from one of its shareholders. The shareholder, who owns 5% of the shares, is unhappy that the company has not dealt with a breach of duty by one of the directors who has involved his wife in the breach. The director’s wife is not a director.
Which of the following statements represents the correct advice about a claim under s 260 CA 2006 by the shareholder?
(a) It will not be possible to include the wife in the action as she is not a director.
(b)
The claim will be brought by the shareholder in their personal capacity.
(c) The shareholder can bring a claim against the defaulting director and his wife.
(d)
The shareholder must bring the claim against all of the directors who will be jointly and severally liable under s 260 CA 2006.
(e)
The claim will be brought against the company as a body corporate.
(c) The shareholder can bring a claim against the defaulting director and his wife.
A company secretary has received a letter from one of its former shareholders threatening to bring a derivative claim under s 260 CA 2006. The shareholder sold all their shares 12 months ago to the company.
The claim relates to a one-off breach of duty by two of the directors that happened 18 months ago.
The company issued shares this week to a new shareholder.
Which of the following statements represents the correct advice about a potential claim under s 260 CA 2006 by the shareholder?
(a)
It is not possible for anybody to bring a claim under s 260 CA 2006 as the claim has not been brought as soon as is practicable.
(b)
The complaining shareholder will not be able to bring a derivative claim because they are no longer a member.
(c) The new shareholder will not be able to bring a derivative action because they were not a shareholder at the time of the alleged default.
(d)
The new shareholder can bring a claim if they join a shareholder who was a member at the time of the default into the action.
(e) The complaining shareholder will be able to bring a claim if they can prove the default happened at a time when they held shares in the company.
(b) The complaining shareholder will not be able to bring a derivative claim because they are no longer a member.
Which of the following is the correct definition of a derivative claim?
(a)
A claim brought by a member seeking for the company to be wound up.
(b)
A claim brought by a member in respect of a cause of action vested in the company seeking relief on behalf of the company.
(c)
A claim brought by a member seeking for the company to buy their shares.
(d)
A claim brought by a member in respect of a wrong done to the member personally.
(b) A claim brought by a member in respect of a cause of action vested in the company seeking relief on behalf of the company.
Is the power of shareholders to require GM restricted to removal resolutions?
No, it is a general power.
If directors have failed to call GM meeting after s. 303 request, who can call the meeting themselves?
Either all of the shareholders who have submitted s. 303 request or any of them representing more than 1/2 of voting rights of those whose submitted s. 303 request
