BLP: Shareholders Flashcards
(30 cards)
What statutory provision gives shareholders a right to enforce the Articles as a contract?
Section 33 CA 2006: members can sue if their membership rights under the Articles are infringed.
Name four examples of membership rights enforceable under s33 CA 2006.
Right to a declared dividend; right to share in surplus capital on winding up; right to vote at general meetings; right to receive notice of GMs and AGMs.
What is the primary benefit of a shareholders’ agreement compared to relying solely on the Articles?
It creates enforceable personal rights among shareholders (e.g., veto rights) that cannot be implied from the Articles.
List three matters commonly reserved for unanimous shareholder consent in a shareholders’ agreement.
Removal of a director; changes to share capital or rights; admission or transfer of shares.
Under s303 CA 2006, what proportion of share capital must petitioners hold to require the directors to call a general meeting?
At least 5% of paid-up voting share capital.
What information must a s303 request state?
The general nature of business to be dealt with at the GM and may include the text of the proposed resolution.
What are the notice requirements for a s303-requested meeting if directors fail to call it?
Called by shareholders themselves on at least 14 clear days’ notice, to be held within 3 months of the s303 request.
What minimum rights does any shareholder have under CA 2006?
Right to receive notice of GMs (s307), appoint a proxy (s324), vote (s284), receive dividends (if declared), inspect accounts (s423), inspect registers (s116), and petition for derivative or unfair prejudice claims.
What additional right does a shareholder with at least 5% shareholding have under CA 2006?
The right to require directors to call a GM (s303) and circulate written statements for proposed resolutions (s314).
What additional right does a shareholder with at least 10% shareholding have?
The right to demand a poll vote at a general meeting.
How can a shareholder with 25% shareholding block a special resolution?
By withholding their vote, since special resolutions require 75% of votes cast (s283).
What is required to propose removal of a director under s168 CA 2006?
An ordinary resolution passed by simple majority, following at least 28 clear days’ special notice to the company (s312).
Why must the board circulate the removal resolution to all shareholders once special notice is received?
To ensure all shareholders know that a GM will consider that removal resolution (s312(2)).
If the board refuses to place a removal resolution on the GM agenda, what can petitioning shareholders do?
Serve a s303 request to force the directors to call a GM; if directors default, shareholders may call the GM themselves under s305.
What rights does a director subject to removal under s169 CA 2006 have?
Right to be sent a copy of the special notice (s169(1)), to make written representations (if of reasonable length) (s169(3)), and to be heard at the GM (s169(2)).
What is a Bushell v Faith clause and how does it protect a director-shareholder?
A provision weighting voting rights (e.g., triple votes per share) at a removal vote, making it harder for majority shareholders to achieve a simple majority to remove that director.
Under what conditions may a company pay compensation to a removed director without shareholder approval?
If the payment plus other relevant payments does not exceed £200 (s221) or is made in good faith to discharge an existing legal obligation or settle a claim (s220).
What must be lodged for shareholders to inspect regarding a director’s long-term service contract?
A copy (or memorandum if unwritten) of the contract must be kept at the registered office for one year after termination, and made available for inspection free of charge (s228–229).
What is a derivative claim under s260 CA 2006?
A claim by a member on behalf of the company for a cause of action vested in the company, seeking relief for negligence, default, breach of duty or trust by a director (including shadow directors).
Against whom may a s260 derivative claim be brought?
Against the director(s) responsible for breach, or in narrow circumstances against third parties who knowingly assisted the breach.
What is the first-stage threshold for a derivative claim under s261 CA 2006?
The shareholder must show a prima facie case; the court must refuse permission if an acting director under s172 would not pursue the claim (s263(2)).
In deciding whether to grant permission at stage two for a derivative claim, what must the court consider?
Factors in s263(3), including good faith, views of uninvolved shareholders, whether the act would likely be ratified by the company, and the benefit to the company.
How does a derivative claim remedy differ from a personal claim under s994 CA 2006?
Derivative claim remedies are granted to the company (e.g., restitution or damages to company), whereas s994 remedies are personal orders (e.g., purchase of petitioning shareholder’s shares).
What is the statutory test for an unfair prejudice petition under s994 CA 2006?
That the company’s affairs are or have been conducted in a manner unfairly prejudicial to the interests of members generally or some part thereof, including the petitioner.
