Shareholders

Question 1

Removal of a director

CA
Green

Answer 1

s. 168 - right to remove director by ordinary resolution
s. 169 - director has right to protect removal
s. 288 (2) - can’t use written resolution
s. 312 - special notice of 28 (clear) days
s. 360 - clear day rule applies to s.312

Question 2

Pedley v Inland Waterways Association

Answer 2

Directors are NOT bound to place a resolution to remove a director on the agenda for consideration at a general meeting.

Question 3

Payments to directors for loss of office

CA
Green (exceptions in Red)

Answer 3

s.215 - Payments to director for loss of office
s.216 - Amounts taken to be payments for loss of office
s.217 - Member approval needed
s.220 - Exception for payments in discharge of legal
obligaitions
s.221 - Exception if less than £200

Question 4

Shareholder actions

CA
Green

Answer 4

s.260 - Derivative claims (action vested in the company)
s.261 - Must apply for permission to continue claim
s.262 - Member can continue a claim brought by the c
company as a derivative claim (if abuse etc.)
s.263 - Factors for/against giving permission
s.264 - Member can continue a derivatice claim
brought by another member.

s.994 - Unfair prejudice action (minority)

Question 5

Shareholders’ rights RE meetings

CA
Green

Answer 5

s.303 - Members’ power to require directors to call GM
s.304 - Directors’ duty to call as a result of s.303
(Note: clear day rule does NOT apply)
s.305 - Memebrs can call themselves if directors fail

s.321 - Right to demand a poll

Question 6

Bushell v Faith

Answer 6

Bushell v Faith clause:

Gives a director who is also a sharheolder weighted voting rights when a s.168 resolution is proposed.

Normally found in smaller companies where one of the directors played key role in setting it up and has expectation they will continue to be involved.

Question 7

Shareholders’ Agreements

Answer 7

• New member is automatically party to aritlces; must sign deed of adherence to be party to shareholder agreement.
• Shareholders’ Agreement places personal obligations on shareholders only; CANNOT fetter a compay’s discretion - so would still pass resolution (for example) but could sue shareholder for not voting in accordance with how they agreed in shareholders’ agreement - i.e. for breach of contract.
• Company itself will be party to the Shareholders’ Agreement - but must NOT be party to any terms that would restrict its statutory powers - should make clear in the recitals that the Company is party for specified clauses only.
• RUSSELL v NORTHERN BANK:
  If a company is party to an agreement which fetters the company’s exercise of statutory powers, those terms will be UNENFORCEABLE agaisnt the company.
• Company is bound to accept vote of a shareholder even if that shareholder is voting in a way that breaches the shareholders’ agreement.
• Shareholders’ Agreements are confidential!
  Need not be registered at Companies House.
• If shareholders also directors, Shareholders’ Agreement must not fetter their discretion as directors.