Shareholders' rights and remedies

Question 1

can shareholders sue if the membership rights are infringed?

Answer 1

yes under s33 CA 2006 can sue in their capacity as shareholder e.g if their right to vote at meetings or to a dividend.

Question 2

how can shareholders remove directors and how much notice must be given?

Answer 2

by ordinary resolution.
must give 28 clear days (special notice) before the general meeting.

If board decides to put removal resolution on the agenda, they must gives at least 14 clear days of the notice of the removal.

Director can vote against his own removal.

Question 3

what is a s303 request?

Answer 3

shareholders together holding not less than 5% of the paid voting share capital can serve a request on the company i.e the board.

• Directors must call the GM within 21 days from the date on which they become subject to the s303 request and to be held not more than 28 days after the date of the notice calling the GM.
• s305 CA 2006- can call a GM themselves- GM must be called on no fewer than 14 days’ notice and held within 3 months of the date that the directors recieved the s303 request.

Question 4

what is a bushell v faith clause?

Answer 4

can give the director, who is also a shareholder, weighted voting rights at a GM which s s168 is proposed.

Question 5

what is a derivative claim?

Answer 5

allows a shareholder to bring a claim on behalf of the company where the directors have breached their statutory duties.

must obtain permission from the court

Question 6

what is an unfair prejudice claim?

Answer 6

• Allows a member to bring an action on the grounds that the company is being ran in such a way that they have suffered unfair prejudice and that an actual or proposed act or omission of the company is or would be so prejudicial.
• Examples include the granting of excessive remuneration to directors, directors’ dealing with associated persons, non-payment of dividends.
• Shareholders sue for themselves.
• most common remedy is purchase of shares/

Question 7

what is just and equitable winding up?

Answer 7

Right to bring a petition to the court for the company to be wound up on the basis it is just and equitable to do so.

Question 8

does the director being removed have a right to speak at the general meeting?

Answer 8

yes, have right to make representations.

directors must send a company of the director’s written representations to all shareholders and read them out if not sent.