Company Decision making

Question 1

Directors’ decision making

Answer 1

1. Notice of board meeting: must be reasonable (MA9)
2. Quorum: two directors must be present at all times during a board meeting (meeting is quorate) (MA11)
3. Director may not count in the quorum or vote if a proposed decision of the board is concered director personal interest. (MA14 - may be disapplied in articles). Director must declare personal interests unless (i) it is unlikely give rise to conflict of interest or (ii) other directors are aware of or (iii) the terms of service contract that have been considered in a meeting of board. Obligation to declare cannot be disapplied (s177 CA2006)
4. Voting at board meeting: simple majority (by show of hand). Chair has casting vote.
5. Unanimous decisions can be passed** in writin**g

Question 2

Types of shareholders’ resolutions

Answer 2

1. Ordinary resolution: over half of vots cast at a shareholders’ general meeting (S282 CA2006)
2. Special resolution: 75% or more of votes (s283 CA2006)

Question 3

Notice for General meetings

Answer 3

1. Shareholders’ meetings are called by board of directors by passing a board resolution.
2. Notice must be given to every shareholder and director, to the auditor (if any), in hard copy, electronic, means of website or combination of those means.
3. Content of notice must include:
   (a) time, date and place
   (b) general nature of business to be dealt with
   (c) if special resolution is proposed, exact wording of such resolution;
   (d) each shareholder’s right to appoint a proxy to attend
4. Notice period 14 clear days (day of receipt of notice and day of meeting not counted). If notice is deliver by hand, it will be deemed as received on the same day, if by post or email, will be deemed received 48 hours after notice was posted or emailed.

Question 4

Quorum and voting of GM

Answer 4

1. Subject to company’s articles, quorum is two shareholders (1 if there is only one shareholder)
2. Voting is on show of hand, each shareholder has 1 vote (unless poll vote is required)
3. Poll vote: on the basis one vote for each share they own instead of 1 vote per person.
4. Poll vote may be required by:
   (a) chair
   (b) directors
   (c) two or more persons having the right to vote on the resolution
   (d) person(s) representing not less that 1/10 of total voting rights of all shareholders.
5. Poll vote can be demanded at any time, and override the vote on show of hand.

Question 5

Short notice

Answer 5

GM can be held on short notice if:
1. majority in number of the company’s who between them hold 90% or more of company’s voting shares
2. Percentage increase to 95% for public companies

Question 6

Written resolutions of GM

Answer 6

1. only permitted for private companies
2. Board will hand out, post or email a written resolution or place resolution on website
3. Written resolution must be circulated to every eligible member
4. Written resolution must include content:
   (a) how to signify agreement
   (b) deadline for returning the written resolution (lapse date)
5. Unless articles provide otherwise, lapse date is 28 days from circulation of written resolution (irrespective of method of circulation), generally interpreted as midnight of 28th day following circulation (circulation date counting as day 1).

Question 7

When are written resolutions of GM passed?

Answer 7

1. each shareholder has 1 vote per share.
2. For ordinary : over half of all of company eligible members
3. For special: 75% of all of company eligible members

Question 8

Minority shareholders statutory rights

Answer 8

1. Shareholder(s) of 5% or more are entited to require company to circulate a written resolution. AoA can reduce the percentage but cannot increase. Company must circulate with 21 days of request.
2. 5% paid up capital shareholder(s) can request board to call a GM, request must state the general nature of business to be dealt with. Board must call within 21 days of request and GM must be call within 28 days of notice by board (total 49 days)
3. Right to circulate a written statement (not be voted) : 5% or 100 shareholders holding at least GBP 100 average fo paid up share capital
4. Bring an injunction against directors to prevent breach of AoA
5. Information right.

Question 9

Other rights of minority shareholders

Answer 9

1. Right to apply to **wind up ** the company
2. Unfair prejudice claim
3. Contractual rights under shareholders agreement and AoA
4. Derivative claim
   a) a claim by any shareholder in the company’s name for wrongs committed against the company (usually breach of duty by a director)
   b) Shaeholder must apply for court for permission to bring the claim: claim must promote success of company, shareholder act in good faith and director’s breach has not been ratified/authorised by the company’s board or shareholders.

Question 10

Post decision requirement

Answer 10

Filing at Companies House:
1. Copies of all special resolutions must be filed at CH
2. Some of ordinary resolutions also
3. Must notify CH of certain decision made. Penalty for failing to notify will be penalty for the company and all officers.