Companies: joint decision making

Question 1

What five things must the notice of the meeting contain?

Answer 1

1. Company name
2. Time, date and place of the meeting
3. General nature of business to be carried on at the meeting
4. Right to appoint a proxy to attend
5. Full text of any special resolution

Question 2

A shareholder holding at least what % of the paid-up voting capital can require the directors to call a meeting, within what time must the directors (1) call the meeting and (2) hold the meeting?

What happens if the directors fail to call the meeting?

Answer 2

5%. Called within 21 days; held within 28 days.

The shareholder who requested the meeting, or any shareholder(s) holding 50% of the voting rights can call the meeting themselves

Question 3

What additional time period is added where notice is communicated by a method other than hand delivery?

Answer 3

48 hours

Question 4

How can you work out notice periods quickly on the exam?

Answer 4

Last date notice can be given:
- Meeting date minus 15 days if hand delivered
- Meeting date minus 17 days if other method

Earliest date a meeting can be held:
- Notice date plus 15 days if hand delivered
- Notice date plus 17 days if other method

Question 5

What proportion of shareholders must agree to hold a meeting on shorter notice?

Answer 5

Majority of shareholders (in number), holding 90% of the shares

Question 6

In what situation can the short notice procedure not be used?

What is a workaround?

Answer 6

For matters requiring documents to be left at the registered office for 15 days prior to the meeting

If the relevant majority of the shareholders is also on the board (and in attendance at the meeting), the board can adjourn a board meeting and have the shareholders pass whatever is to be passed as a written resolution, which can include the documents, getting around the 15 day requirement. Should only be used when you are sure the shareholders in attendance are on side and will approve

Question 7

If a company has more than one shareholder, can a single shareholder who is present in his own capacity but also as proxy for another shareholder form a quorum of two?

Answer 7

No

Question 8

What six things are among those for which a special resolution is required?

Answer 8

1. Amend the articles
2. Reduce share capital / buy back shares
3. Wind up the company
4. Change company name
5. Disapply pre-emption rights
6. Change company status, i.e. private to public

Question 9

What is a poll vote and what two groups can demand one?

Answer 9

Instead of one vote per shareholder in the show of hands method, it becomes one vote per share, and can be demanded by:
1. Any five shareholders or more, or
2. Shareholders with not less than 10% of the voting rights or 10% of the paid-up capital

Question 9

Within what time period must a special resolution be filed at Companies House?

Answer 9

15 days

Question 10

Can a written resolution be used for both types of shareholder resolutions?

Answer 10

Yes

Question 11

In addition to the board deciding to circulate a written resolution, who can require them to do so?

Answer 11

Shareholders who hold at least 5% of the voting rights
(same % as for a shareholder demanding a general meeting)

Question 12

What two things must a written resolution contain?

Answer 12

1. Statement informing the shareholder how to signify agreement
2. When the resolution will lapse if not approved, typically 28 days from and including the circulation date (unless the articles provide differently)

Question 13

Whilst the % thresholds for ordinary and special resolutions are the same >50% and 75%+ as when voted in person, what is the crucial difference with a written resolution with regard to the pool from which those % are taken?

Answer 13

For a written resolution, it is >50% and 75%+ of all shareholders, compared to just those present at a meeting

Question 14

What is the four step process when a decision requires approval of both the directors and shareholders?

Answer 14

1. Approval starts with board meeting and board resolution approving the matter
2. Board then resolves to call shareholders general meeting or circulate written resolution for shareholders to approve
3. Shareholders vote whether to pass the resolution, and it is passed if they do
4. Board then enters into the approved transaction, resolving this if relevant

Question 15

Whilst no further action is usually required, what is one situation where directors will need to take further action, and what is that action?

Answer 15

If the resolutions have approved entering a contract to purchase property, the directors would need to resolve to appoint two directors to execute the contract

Question 16

What is a substantial property transaction and what is the de minimis threshold?
At what threshold is a transaction automatically an SPT and what is the test for figures between £5,000 and it?

Answer 16

Where a director buys or sells property from or to the company.
Less than £5,000 is de minimis
£100,000. If between 5k and 100k, it will be an SPT if its value exceeds 10% of the company’s net assets

Question 16

Unless otherwise provided, what nine things require an ordinary shareholder resolution only?

Answer 16

1. Appoint/remove director/auditor
2. Adopt annual accounts
3. Declare a dividend
4. Approve director’s decision to allot shares
5. Approve substantial property transaction with an interested director
6. Ratify of director’s breach of duty
7. Enter service contract with director of more than two years
8. Make loan to director
9. Give payment to director for loss of office

Question 17

Within what time period of a resolution being adopted by the board, shareholders, or both must it be filed at Companies House?

Answer 17

14 days 15 days for special resolution