Week 9 - Shareholders

Question 1

what rights are generally attached to shares?

Answer 1

• vote
• information
• sharing in company profits (dividends)
• sharing in surplus capital after winding up

Question 2

what is the definition of a share?

Answer 2

units into which proprietary interest in a profit company are divided

Question 3

what can the MOI say about shares?

Answer 3

• terms for voting rights
• entitle SH to distributions
• divide shares into classes

Question 4

what are the duties which attach to shares?

Answer 4

• pay for shares
• participate in meetings and vote
• comply with MOI, rules, SH agreements
• notify company of any changes needing to be made to the SH register

Question 5

what is the purpose of a SH meeting?

Answer 5

to vote and debate on a decision to be made

Question 6

who attends a SH meeting?

Answer 6

the SH who have the rights to vote

Question 7

what powers do the SH with voting rights have?

Answer 7

• amend the MOI
• approve board rules
• appoint/remove directors
• approve SH remuneration

Question 8

who may call SH meetings?

Answer 8

• board or anyone specified by MOI

- SH, individually or collectively, that hold at least 10% voting rights (MOI can require less)

Question 9

what is the record date?

Answer 9

the date before which SH must be registered before they may vote or receive dividends

Question 10

what are some rules regarding the record date?

Answer 10

may not be less than 10 business days before meeting

Question 11

what are the rules regarding timing of notice of SH meetings?

Answer 11

given 15 (pub) / 10 (priv) days prior to meeting (MOI can change this)

Question 12

what must be included in notice of SH meetings?

Answer 12

• date, time, place
• purpose of meeting
• copy of proposed resolutions to be tabled

Question 13

when may the SH meeting still be held despite non-compliance?

Answer 13

• unanimous assent at common law
• companies with 1 SH
• every SH is also a director

Question 14

what is a proxy?

Answer 14

if a SH cannot attend a meeting, they can send a proxy who will attend/vote/speak on behalf of the SH

Question 15

rules for a proxy?

Answer 15

• does not have to be a SH
• multiple may be appointed
• must be appointed in writing and must be presented to company before the meeting
• you can tell them how to vote or they can use their discretion when representing you

Question 16

how long is a proxy valid for?

Answer 16

a year, unless expressly state otherwise in the proxy document

Question 17

what is a quorum?

Answer 17

the minimum number of qualified persons whose presence at a meeting is necessary before business can be validly transacted

Question 18

what are the quorum requirements for a valid meeting?

Answer 18

at least 25% of SH entitled to vote on any particular matter must be present

Question 19

what are the quorum requirements for a matter to be considered?

Answer 19

at least 25% of SH entitled to vote on that particular matter must be present

Question 20

what are the resolution percentages?

Answer 20

(of those present at the meeting)

• 50%+1 = ordinary
• 75% = special

Question 21

what is the Annual General Meeting?

Answer 21

a meeting held once a year where particular business is required to be conducted

Question 22

which company is required to hold an AGM?

Answer 22

public companies

Question 23

what is the minimum business to be conducted at the AGM?

Answer 23

• presentation of directors report, AFS, audit comm report
• election of directors
• appointment of auditor and audit comm
• any matters raised by SH

Question 24

what is the majority rule?

Answer 24

when a person becomes SH, they agree to be bound by the decisions of the majority, unless decisions not made lawfully

Question 25

what does special resolution do for the minority?

Answer 25

protects the minority

Question 26

what are the Act’s remedies for protecting minority SH?

Answer 26

• declaration of rights
• relief from oppressive, prejudicial conduct
• appraisal remedy
• derivative action

Question 27

what is a declaration of rights?

Answer 27

a SH may apply to court for a declaratory order regarding their rights ito:

• the Act
• MOI
• company rules

Question 28

what can appraisal remedy be used for?

Answer 28

• resolutions to amend the MOI in a way that alters the rights/terms attached to shares that is materially adverse to their rights/interests
• if a company is undertaking a fundamental transaction

Question 29

what are the procedural requirements of the appraisal remedy?

Answer 29

• they are entitled to the value of their shares immediately before the resolution is adopted
• must give written notice of objection before resolution is put to vote
• attend meeting and vote against resolution
• notify company that they will rely on appraisal rights after meeting

Question 30

what does derivative action allow for?

Answer 30

allows the SH to litigate on the company’s behalf to enforce their SH rights

Question 31

what are the steps for statutory derivative action?

Answer 31

• serve a demand on the company
• an independent person must be appointed by company to investigate if their are grounds to proceed
• company may either initiate proceedings or refuse to comply

Question 32

what if the company refuses derivative action?

Answer 32

• the SH may then approach the court to say they want to litigate on behalf of the company and will have to satisfy the court that we are acting in good faith