Board And General Meeting And Written Resoluitions Flashcards
(141 cards)
1
Q
Who makes decisions on behalf of a company?
A
Decisions are made by the company’s directors (managers) or shareholders (owners).
2
Q
Can an individual be both a shareholder and a director?
A
Yes, an individual can be both a shareholder and a director, operating in two different capacities.
3
Q
How does a director participate in decision making?
A
A director participates by attending board meetings or voting on a director’s written resolution.
4
Q
How does a shareholder participate in decision making?
A
A shareholder participates by attending general meetings or voting in a shareholder’s written resolution.
5
Q
Who has the majority of decision-making authority in a company?
A
The company’s directors have the majority of decision-making authority and are responsible for the day-to-day management of the company’s affairs.
6
Q
What does Model Article 3 grant to directors of a limited company?
A
Model Article 3 grants directors general authority to manage the company’s business and exercise all the powers of the company.
7
Q
How can directors make decisions?
A
Directors can make decisions by either holding a vote at a board meeting or passing a directors’ written resolution.
8
Q
What must directors comply with when passing decisions?
A
Directors must comply with certain procedural rules set out by the Model Articles and the Companies Act 2006.
9
Q
What are Model Articles?
A
Model Articles are a constitutional document known as the ‘articles of association’ that regulate the internal affairs of the company.
10
Q
What articles apply to companies incorporated on or after 1 October 2009?
A
A standardised default set of articles, known as the ‘Model Articles’, will apply.
11
Q
What articles apply to companies formed before 1 October 2009?
A
A different set of default articles, known as ‘Table A Articles’, will apply.
12
Q
Do shareholders typically involve themselves in company decision-making?
A
No, the company’s shareholders (its owners) do not typically involve themselves in the decision-making.
13
Q
What decisions can only be taken by the company’s shareholders?
A
Decisions that can only be taken by the company’s shareholders include:
- Changing the company name (s77, CA 2006).
- Changing the company’s articles of association (s21, CA 2006).
- Removing a director (s168, CA 2006).
- Ratifying a director’s breach of duty (s239, CA 2006).
- Disapplying pre-emption rights (s569 and s570, CA 2006).
14
Q
Which decisions require shareholder approval?
A
- Approving a director’s service contract for a fixed term of more
than two years (s188, CA 2006).
2.Approving the company entering into a substantial property
transaction (s190, CA 2006).
- Approving the company lending money to a director (s197(1), CA
2006).
4.Approving making a compensation payment to a director for loss
of office (s217, CA 2006).
5.Approving the payment of a dividend (MA 30).
6.Authorising the issuing of new shares in the company if the
directors do not have the requisite authority (s551, CA 2006).
7.Authorising a buy-back of shares by the company (s694 and s716,
CA 2006).
8.Authorising the company to reclassify some of its share capital as
distributable profits (s641, CA 2006).
15
Q
How do shareholders vote on matters requiring their approval?
A
Shareholders vote either by:
- A vote by show of hands: where each member present has one vote.
- A poll vote: where each member has one vote per share they hold.
This reflects shareholders’ views in proportion to their respective interests.
16
Q
What is a General Meeting?
A
A General Meeting is a meeting of the company’s shareholders.
It is where shareholders can vote on matters requiring their approval.
17
Q
What is an alternative to calling a General Meeting for voting?
A
A company can hand out, post, or email a written resolution to its shareholders.
18
Q
What can shareholders do with a written resolution to indicate if they are in favour?
A
Shareholders can sign and return the written resolution if they wish to vote in favor of the proposed resolution.
19
Q
Where can further mechanisms regarding General Meetings and Shareholder’s Written Resolutions be found?
A
These mechanisms are considered further in notes on General Meetings and Shareholder’s Written Resolutions.
20
Q
Decisions that can be taken by the shareholders (or directors)
A
Appointing a new director (MA17).
21
Q
How can a director call a board meeting?
A
A director may call a board meeting by giving notice of the meeting to the directors.
(MAg (1))
22
Q
Who can give notice of a board meeting?
A
The directors may authorize the company secretary to give notice rather than giving it themselves.
(MAg(1))
23
Q
What is the requirement for notice of a board meeting?
A
Notice must be reasonable.
24
Q
What are directors entitled to regarding notice?
A
Directors are entitled to receive reasonable notice of the board meeting.
(Re Homer District Consolidated Mines, Ex parte Smith (1888) 39 Ch D 546)
25
What determines what is considered reasonable notice?
What amounts to reasonable notice depends on the circumstances.
26
How much notice might suffice for small companies?
For small companies, just a few minutes might suffice if all directors are in one place where the board meeting is to be held.
27
What is the key question regarding notice?
The key question is: have the directors had a reasonable opportunity to attend?
28
Can a company's articles specify a minimum notice period?
Yes, the company's articles may be amended to specify a minimum notice period, which must be adhered to.
29
What must the notice include according to Model Article 9(2)?
The notice must include the proposed date and time of the meeting, the location, and how the directors will communicate if they are not in the same place.
30
Does the notice need to be in writing?
No, the notice need not be in writing.
## Footnote
Oral notice is acceptable (Browne v La Trinidad (1887) 37 ChD 1 (CA)).
31
What factors should be considered when giving notice for a meeting?
Consider who is calling the meeting, who must receive the notice, what is reasonable in the circumstances, and if specific factors indicate a need for longer or shorter notice.
32
What is a quorum?
A quorum is the minimum number of directors required by the company's articles to be present at the board meeting for valid decisions to be made.
33
What is required for proposals to be voted upon at a board meeting?
A quorum must be present at a board meeting for proposals to be voted upon.
## Footnote
"Unless a quorum is participating, no proposal is to be voted on" (MA 11(1)).
34
What is the minimum number of directors required for a quorum?
The quorum must never be less than two unless the total number of company directors is one, in which case one director will suffice.
## Footnote
MA 11(2)
35
Can a single director make decisions without regard to the articles?
Yes, a single director can take decisions without regard to any of the provisions of the articles relating to directors' decision-making.
## Footnote
Model Article 7(2)
36
Who constitutes a quorum?
A quorum is made up of directors only; it does not matter who else might be in attendance at the meeting.
37
What should be considered regarding directors' attendance at a board meeting?
Consider if there is a sufficient number of directors to constitute a quorum and if any director might be unable to attend the board meeting.
38
What happens if a director is personally interested in a transaction?
If a director is personally interested in a transaction, they cannot participate in the quorum for that vote.
## Footnote
MA 14(1): if the board is voting on a transaction in which a director is interested, that director is not counted as participating in the decision-making process.
39
What happens if a director is personally interested in a transaction?
The director will be unable to participate in the quorum if the vote concerns a transaction in which the director is interested.
## Footnote
Model Article 14(1) states that the director is not counted as participating in the decision-making process.
40
Can a director with a personal interest participate in calling a General Meeting?
Yes, if the decision only requires approval by the shareholders, the interested director may count in the quorum to vote to call the General Meeting.
## Footnote
Example: Approving a Substantial Property Transaction.
41
What is an exception to a director being unable to participate in a quorum?
If the directors have previously agreed to modify the company's constitution to disapply Model Article 14, the director may count as participating.
42
What happens if Model Article 14 is disapplied?
The director will be able to count as part of the quorum even if they have a personal interest in the matter.
43
When will a director not be prevented from participating in the quorum?
A director will not be prevented if their interest cannot reasonably be regarded as likely to give rise to a conflict of interest.
44
What are the exceptions to the rule that an interested director will not be allowed to count in a quorum as set out in Model Article 14?
director will not be prevented from participating in
the quorum if:
MA 14(3): their interest “cannot reasonably be
regarded as likely to give rise to a conflict of
interest”.
MA14(4)(a): the vote concerns a guarantee given
to or by the Director for an obligation of the
company.
MA 14(4)(b): the vote concerns a contract with
the director to buy shares in the company
45
How can directors temporarily disapply MA 14(1)?
Directors can temporarily disapply MA 14(1) by ordinary resolution, allowing the director to count in the quorum.
46
What should be considered regarding directors and voting?
Consider if any directors are prevented from voting due to conflicts of interest and whether MA14 applies.
47
What must a director do if they are interested in a proposed transaction?
They must declare the nature and extent of their interest at the board meeting or by written notice before the company enters into the contract.
48
Is the obligation to declare interest disapplied if MA14 is disapplied?
No, the obligation to declare under s177 cannot be disapplied by the company.
49
What must be ensured regarding the quorum for passing a resolution?
There must be enough directors who can participate in the quorum to pass the resolution.
50
What is required for a board resolution to pass according to MA 7?
A majority in number of the directors must vote in favour of a resolution.
51
What happens if the vote is tied?
If there is a deadlock, the negative prevails.
## Footnote
For example, if 4 directors are voting on a resolution to change the company's registered office, 2 vote in favour, and 2 against, the decision will be that the company will not change its registered office.
52
What role does the chairperson have in the event of a deadlock?
The chairperson of the meeting has a casting vote (MA 13).
53
When can the chairperson not use their casting vote?
The chairperson cannot use their casting vote if they are unable to participate in the quorum (MA 13(2)).
54
Does the chairperson need to use their casting vote to make a negative prevail?
No, they do not need to use their casting vote to make a negative prevail, as the negative prevails in any event in the event of a deadlock.
55
What is the practical limitation of the chairperson's casting vote?
The chairperson's casting vote is practically limited to causing a resolution to pass.
56
What is a practical point regarding decision-making?
If possible, it is best to take decisions by a majority rather than by casting vote, as this is more authoritative.
57
How is a decision typically taken by shareholders?
This is normally done by way of a vote at a general meeting (GM), but can also be undertaken by written resolution.
## Footnote
See notes on Shareholder's Written Resolutions.
58
What is the process for decisions requiring shareholder approval where those decisions are voted on in a GM?
The directors will propose the decision and resolve to call the GM. If the resolution passes at the GM, the directors will reconvene the board meeting and note in the minutes that the resolutions proposed at the GM duly passed.
## Footnote
They will also deal with administration.
59
What is the process when directors propose a decision subject to shareholder approval?
They will call a board meeting and the directors will vote on the resolution 'subject to the approval of the shareholders'.
## Footnote
For example, the directors may vote to propose to grant a director a service contract for a fixed term of 3 years 'subject to the approval of the shareholders'.
60
What happens after the directors vote to propose a resolution requiring shareholder appproval?
The board will resolve to call a General Meeting, at which the shareholders will vote to approve the resolution.
## Footnote
See notes on General Meeting Procedure.
61
What occurs if the vote at the GM passes?
There will be a reconvened board meeting, at which the directors will proceed with the next steps, note in the minutes that the resolutions were approved by the shareholders; and. Deal with administration
62
What does decision-specific administration involve?
Decision-specific administration may include filing forms and/or documents with Companies House and updating Company Registers.
63
What registers must companies maintain?
Companies must maintain various registers, including: a register of members, a register of directors, a register of directors' residential addresses, a register of secretaries, and a register of persons with significant control (PSC register).
64
When must the registers be updated?
Registers must be updated whenever details set out in the relevant register change, such as when a new director is appointed.
65
What changes will the Economic Crime and Corporate Transparency Act 2023 bring?
The Act will remove the requirement for companies to keep registers except for the register of members, placing the obligation to notify Companies House of relevant information changes on the company.
66
What are the consequences of failing to notify Companies House?
Failure to notify Companies House will result in an offence being committed, for which the directors can be fined.
67
What is required of directors regarding written records of decisions?
Directors must keep a record, in writing, for at least 10 years from the date of the decision, of every unanimous or majority decision taken by the directors.
## Footnote
MA15
68
What does CA 2006 require regarding board meeting minutes?
CA 2006 requires minutes to be recorded for every board meeting, which must be kept at the company's registered office (or Single Alternative Inspection Location (SAIL)) for 10 years.
## Footnote
5248
69
What is the consequence of failing to keep required records?
A failure to keep required records is a criminal offence committed by every officer of the company in default.
## Footnote
5248(3)
70
How can directors make decisions without a physical meeting?
Directors can take decisions by way of a written resolution, allowing the company to make decisions without holding a physical meeting.
71
What is the first step in the written resolution process?
The resolution is proposed by a director.
72
What happens after the proposal is made in a written resolution?
The proposal is circulated to each eligible director for approval.
73
Who is considered an eligible director for voting?
A director is eligible if they would have been entitled to vote on the matter at a board meeting, meaning directors with a personal interest cannot participate.
74
What is required for a written resolution to pass?
The resolution will only pass if all eligible directors agree to the proposed resolution, requiring unanimity.
## Footnote
Under Model Article 8(1)
75
What is necessary for a directors vote to pass a written resolution in terms of quorum?
A vote can only pass if a sufficient number of eligible directors to form a quorum, had a board meeting been held, are able to vote on the resolution.
## Footnote
MA 8(4)
76
What must directors do after a resolution has passed?
Once the resolution has passed, directors must deal with any administration requirements as if the decision had been taken by board meeting.
77
What must directors do once a written resolution has passed?
Directors must deal with any administration requirements as if the decision had been taken by board meeting.
78
What are the administration requirements after a resolution passes?
This includes dealing with decision-specific admin and keeping a written record of the decision for 10 years as required by MA 15.
79
Do directors need to keep minutes for written resolutions?
No, directors do not need to keep minutes under s248 CA 2006, as this applies only to board meetings.
80
Is there a requirement to keep copies of written resolutions under CA 2006?
No, there is no requirement under CA 2006, but the company's articles may require this.
81
What is considered good practice regarding written resolutions?
It can be good practice to keep copies of written resolutions.
82
What is a general meeting?
A general meeting (GM) is a meeting of the company's shareholders, where the shareholders vote on matters which require their approval under the Companies Act 2006 / the Model Articles.
83
What is required to call a general meeting?
A GM must be 'called'; that is, the shareholders must be invited to attend the general meeting to exercise their voting rights.
84
Who can call a general meeting?
A GM can be called by:
- The directors;
- By board resolution;
- Shareholders who collectively own more than 5% of the company's share capital;
- The court;
- The company's auditors.
85
What acronym is useful for structuring responses to questions about a General Meeting?
The acronym NQVA is useful:
- Notice
- Quorum
- Voting
- Administration.
86
To whom must notice of the general meeting be given?
Notice must be given to:
- All shareholders;
- Every director.
87
Who must receive notice of the general meeting according to CA 2006?
Notice must be given to all shareholders, every director, the personal representative of any deceased shareholder, and the trustee in bankruptcy of a bankrupt member.
## Footnote
The company's auditors are also entitled to receive notice.
88
What does CA 2006 state about the company's articles regarding notice?
The company's articles may make alternative provision for notice.
## Footnote
Refer to section 310(4) of CA 2006.
89
What are the acceptable forms of notice for a meeting?
Notice must be given in one of the following forms:
- In hard-copy;
- This must be handed to the shareholders personally, or sent by post.
- Electronically;
- E.g., by e-mail or fax.
- Via a website;
- Or, by a combination of these methods.
90
What information must be included in the notice?
The notice must include the following information:
- The time, date, and place of the meeting (5311(1)).
- The general nature of the business to be dealt with at the meeting (5311(2)).
- A statement of rights to appoint a proxy (5325(1)).
91
What rights do shareholders have if they cannot attend a meeting?
If a shareholder cannot attend, they are entitled to appoint someone else to attend and vote in their place (a 'proxy').
92
What must be included in the notice if a special resolution is proposed?
If a special resolution is proposed, the notice must include (5283(6)(a)):
- The full text of the proposed resolution.
93
What is the minimum notice period for a general meeting?
A party must give a minimum of 14 'clear days' notice of a general meeting.
## Footnote
(s307A and s360)
94
What must be checked regarding notice periods?
It is important to check the company's articles, as they may require a longer period of notice.
95
What does 'clear days' notice mean?
When calculating the specified notice period, the day on which notice is given and the day of the meeting itself are excluded.
## Footnote
(s360)
96
If notice is given on 5 June, what is the earliest date for the meeting?
The earliest date for the meeting is 20 June, as the notice date (5 June) and the meeting date are excluded from the 'clear days' period.
97
What are the statutory 'deemed delivery' provisions?
A document is deemed to be delivered 48 hours after it was sent if sent by post or electronically.
## Footnote
(s1147 CA 2006)
98
What happens if the deemed delivery provision applies?
If the provision applies, any non-working days must be ignored in counting the 48-hour period.
99
What is 'short notice' in the context of a General Meeting (GM)?
'Short notice' is any notice period that is less than the usual notice period.
100
What must happen for a GM to be held at 'short notice'?
A majority in number of shareholders must agree.
101
If a company has 5 total shareholders, how many must agree for a GM to be held at short notice?
At least 3 shareholders must agree.
102
What percentage of voting shares must the agreeing shareholders hold for a GM to be held at short notice?
Those shareholders must together hold at least 90% of the voting shares in the company.
## Footnote
This 90% threshold may be increased by the articles to 95%.
103
What is the significance of S307(5) and S307(6)(a)?
S307(5) states the voting share requirement, while S307(6)(a) allows for the 90% threshold to be increased to 95%.
104
What questions should be considered regarding company shareholders and short notice?
What percentage share does each company shareholder own? Who needs to vote in favour of short notice for the GM to be held?
105
What happens if valid notice is not given for a general meeting?
Any resolutions passed at the general meeting will be invalid.
## Footnote
(5306(1)(a))
106
Does accidental failure to give notice invalidate a resolution?
No, if notice is accidentally not given to a person entitled to it, the resolution remains valid.
## Footnote
(s313(1))
107
What is a quorum in the context of a general meeting?
A quorum is the minimum number of shareholders required to attend the general meeting for valid decisions to be taken.
## Footnote
(Business Law & Practice, 8.7.5)
108
What is the minimum number of shareholders required for a quorum?
The minimum number is two, unless amended by the company's articles or if it is a single-member company, in which case the quorum is one.
## Footnote
(5318(1) and 5318(2))
109
Can shareholders with a conflict of interest vote at a general meeting?
Generally, yes, but there are exceptions for certain resolutions.
## Footnote
(Pender v Lushington (1877) 6 ChD 70)
110
What are the exceptions where conflicted shareholders cannot vote?
They cannot vote on an ordinary resolution to ratify a director's breach of duty or a special resolution to approve a buy-back out of share capital.
## Footnote
(s239, s695, and s717)
111
Who is entitled to attend a general meeting?
Directors, auditors, and anyone granted permission by the chairman can attend, but only shareholders can vote.
112
What is an ordinary resolution?
An ordinary resolution will pass if more than 50% of members who vote vote in favor.
## Footnote
(s282 CA 2006)
113
What is a special resolution?
A special resolution will pass if 75% or more of members who vote vote in favor.
## Footnote
(s282(4))
114
What are the methods of voting at a general meeting?
There are two methods: voting by show of hands and voting by poll.
## Footnote
(s282 and s283)
115
What are the two methods of voting in a general meeting?
A vote by show of hands or a poll vote.
116
How many votes does each shareholder get?
Every shareholder gets one vote each (s284(2)). Each shareholder gets one vote per share (s284(3)).
117
What can affect the outcome of a vote?
The method by which a vote is conducted can result in a different outcome, depending on the respective shareholder's percentage shares.
118
When can poll votes be conducted?
Poll votes are conducted 'on demand' unless the company's articles otherwise require a poll vote to be carried out.
119
Who has the right to demand a poll vote?
The Chairman of the general meeting, any Director, any two shareholders acting together, or any shareholder holding at least 10% of the shares.
120
Can a single shareholder holding less than 10% demand a poll vote?
No, a poll vote can be demanded by any individual other than a single shareholder who holds less than 10% of the shares.
121
What is the significance of a shareholder opposed to a resolution?
If someone opposed to the resolution has a large shareholding (in excess of 50% for ordinary resolutions, and 75% or more for special resolutions), it can impact whether the vote passes.
122
Does the chairman of a general meeting have a casting vote?
No, unlike the chairman of a board meeting, the chairman at a general meeting does not get a casting vote.
123
What is required for an ordinary resolution to pass?
An ordinary resolution can only be passed with a 'simple majority', i.e., more than 50% (s282).
124
What happens in the event of a 50% tie in a vote?
The chairman cannot break a deadlock in the event of a 50% tie.
125
Who automatically becomes the chairman at general meetings?
Unless a chairman is specifically appointed, the chairman of board meetings will automatically be the chairman at general meetings (MA 39).
126
What happens if there is no appointed chairman at a general meeting?
The directors present, or if there are no directors, the meeting, must appoint a director or shareholder to chair the meeting.
127
What must be done with the minutes of the general meeting?
Minutes must be kept for 10 years at the company's registered office or SAIL (5358(1)).
128
What is the consequence of failing to keep minutes?
Failure to do so is an offence committed by every officer in default.
129
Who can inspect the minutes of the general meeting?
The minutes must be made open to inspection by the shareholders free of charge (s358(3)).
130
What must be filed when special resolutions are voted on?
Copies of special resolutions must ALWAYS be filed with Companies House within 15 days of the resolution being passed or made (s30(1)).
131
What is the consequence of failing to file special resolutions?
Failure to do so is a criminal offence committed by every officer in default (s30(2)).
132
When are ordinary resolutions required to be filed?
Ordinary resolutions are only required to be filed in certain circumstances.
133
What are some examples of documents that must be made available for inspection?
Make certain documents available for inspection, including a directors service contract, a contract to buy back the company’s share, charges over the company’s property
134
What must a company issue when it issues new shares?
Issue new share certificates.
135
What must be filed for an ordinary resolution to give directors authority to allot new shares?
It must be filed in accordance with s551(9).
## Footnote
Example: An ordinary resolution to give the directors authority to allot new shares must be filed in accordance with s551(9).
136
What form is required when changing the company's name by special resolution?
Form NMo1 must be filed at Companies House.
## Footnote
Example: Changing the company's name by special resolution will require Form NMo1 to be filed at Companies House.
137
What must be filed if the company's articles are changed by special resolution?
A copy of the amended articles must be filed no later than 15 days after the special resolution is passed (s26(1)).
## Footnote
Example: If the company's articles are changed by special resolution under s21, a copy of the amended articles must be filed no later than 15 days after the special resolution is passed (s26(1)).
138
How long must a director's service contract be available for inspection?
It must be made available for inspection for at least one year after the end of the contract.
## Footnote
Example: A director's service contract (s228(3) and s229(1) CA 2006) must be made available for inspection for at least one year after the end of the contract.
139
How long must a contract to buy back the company's shares be kept?
It must be kept for at least 10 years.
## Footnote
Example: A contract to buy back the company's shares must be kept for at least 10 years (s702).
140
What must be made available for inspection regarding charges over the company's property?
Charges over the company's property must be made available for inspection (s877).
141
What must a company do when shares are transferred between members?
It must issue new share certificates and destroy certificates belonging to the previous owners.
