Unit 14 - Shareholders

Question 1

Discuss formality compliance.

Answer 1

• One shareholder in a profit company then formality compliance is not required.
• If all the shareholders in the company are also directors, formality compliance is not required, however, all must be present at board meeting that the matter is referred to them in their capacity as shareholders to satisfy quorum requirements.

Question 2

When must the AGM be held ?

Answer 2

• Within 18 months after incorporation.
• Thereafter an AGM must be held every year within 15 months of the last AGM.

Question 3

Who may call a shareholder meeting ?

Answer 3

Board and any other person specified in the MOI or rules of the company.

Question 4

What if there are no directors or directors are incapacitated ?

Answer 4

• Other person authorized by MOI can convene the meeting.
• Nobody is authorized; shareholders may approach Tribunal for administrative order to allow them to convene a meeting at a date and time the Tribunal considers appropriate.

Question 5

Discuss the notice of meetings.

Answer 5

• Must be written.
• Company is required to deliver notice to all its shareholders within 15 business days for public companies and NPC’s with members; and 10 business days for any other company.

Question 6

Discuss the quorum.

Answer 6

• Holders of 25% of all shareholders entitled to vote (either personally, by proxy).
• 25% of voting rights must be present.
• If more than 2 shareholders, must meet person quorum of 3 people of more.

Question 7

What happens if quorum is still not met after one hour ?

Answer 7

• Meeting must be postponed by one week.
• If there is still no quorum at the subsequent postponed meeting, the shareholders present will constitute a quorum.

Question 8

Discuss resolutions.

Answer 8

• Resolutions must be sufficiently clear and specific and accompanied by enough information.
• Resolution is either ordinary (50% +1) or special (75%).
• Calculated on the basis of the voting rights.

Question 9

Discuss the different methods of voting.

Answer 9

• If by show of hands one vote regardless of number of shares.
• If by poll entitled to exercise all voting rights attached to the shares held by such person.
• Must poll if demanded by at least 5 people who have a voting right or by those entitled to exercise at least 10% of the voting rights on the matter.

Question 10

Discuss proxies.

Answer 10

• A shareholder may appoint any person, including a non-shareholder, as a proxy to participate, speak or vote on behalf of the shareholder at the meeting; give or withhold written consent om behalf of the shareholder.
• In writing, dated and signed by the shareholder.
• Remains valid for 1 year or such shorter/longer period provided in the appointment.

Question 11

Discuss the Barry v Clearwater Estates case.

Answer 11

High Court held that a company cannot require that a proxy be lodged before a specific time for it to be valid.