WS5: Shareholders; Ordinary and Special Resolutions

Question 1

What type of resolution should be used if CA does not specify the type of resolution to be used?

Answer 1

Ordinary resolution, unless stated in the Articles

Question 2

Who are votes at GMs counted out of?

Answer 2

Those present and voting

Question 3

What is an ordinary res?

Answer 3

Simple majority - more than 50% e.g. 51%+

Question 4

What is a special resolution?

Answer 4

Not less than 75%

Question 5

How much notice do you need to give a shareholder entitled to attend a GM?

Answer 5

14 clear days, unless short notice procedure used

Question 6

What is the quorum for a GM?

Answer 6

Two

Question 7

If not quorate, what can happen?

Answer 7

Only the appointment of the chairman of the meeting - no other business

Question 8

How do shareholder written resolutions work?

Answer 8

• Must be sent to all eligible members, who then get 28 days to respond.
• After 28 days, the resolution will be deemed NOT passed if the required majority have not indicated they vote in favour
• Must be passed by % of ALL eligible members.

Question 9

What can’t be passed by Written resolution?

Answer 9

Removal or a director / auditor

Question 10

What is the Duomatic principle?

Answer 10

Informal resolutions agreed by ALL shareholders outside of a formal meeting will be valid and binding.

Agreement must be unqualified.

Question 11

What are the principles regarding how shareholders must vote?

Answer 11

• Shareholders have no fiduciary duty to the company
• Must act in a way which is bona fides
• May vote in their own interests

Question 12

What are principles regarding shareholders voting on amending articles?

Answer 12

Court will consider whether reasonable shareholders would have judged that any amendment is for the benefit of the company.

Any amendment of the articles must be done in good faith, and not to undermine substantive rights of minority shareholders.