Shareholders' rights and remedies Flashcards
(229 cards)
1
Q
What section of CA 2006 allows enforcement of membership rights
A
s33
2
Q
What is the usual remedy for breach of section 33 CA 2006
A
damages
3
Q
Are all rights of members enforceable under section 33 CA 2006
A
no
4
Q
What type of right was the solicitor appointment in Eley v Positive Government Security Life Assurance Co Limited
A
nonmembership
5
Q
Can courts imply terms into a company’s Articles
A
no
6
Q
What separate contract can protect rights not in the Articles
A
shareholders agreement
7
Q
What type of agreement extends the Articles governance
A
shareholders agreement
8
Q
Can Shareholders Agreements contain provisions Articles cannot
A
yes
9
Q
What voting requirement might a Shareholders Agreement include for director removal
A
unanimous
10
Q
What is a key difference between Shareholders Agreements and Articles regarding privacy
A
Shareholders Agreements can be private
11
Q
What capacity do Articles treat shareholders in
A
as shareholders
12
Q
What capacity do Shareholders Agreements treat shareholders in
A
personal
13
Q
Are Articles subject to CA 2006
A
yes
14
Q
Do Shareholders Agreements have more freedom than Articles
A
yes
15
Q
Should a company restrict its statutory powers in a Shareholders Agreement
A
no
16
Q
What does a Shareholders Agreement provide for enforcement between members
A
right of action
17
Q
What law governs the enforcement of Shareholders Agreements
A
general contract law
18
Q
What action can a shareholder take for breach of a Shareholders Agreement
A
claim for breach
19
Q
What court order can prevent breach of a Shareholders Agreement
A
injunction
20
Q
Can a Shareholders Agreement prevent unfair prejudice petitions
A
no
21
Q
What matters can be reserved requiring specific shareholder consent
A
certain matters
22
Q
Does unanimous consent in a Shareholders Agreement override section 168 CA 2006
A
no
23
Q
What percentage approval is needed to amend Articles via special resolution
A
seventyfive percent
24
Q
What approval is usually needed to change a Shareholders Agreement
A
unanimous
25
What right does any shareholder have regarding General Meeting notices
receive notice
26
What right does any shareholder have to attend a GM in their place
appoint a proxy
27
What right does a voting shareholder have at a GM
vote
28
What financial right does any shareholder have if declared
receive a dividend
29
What document can any shareholder receive a copy of
company’s accounts
30
What records can any shareholder inspect
minutes and company registers
31
What action can any shareholder take against director duty breaches
ask the court to prevent
32
What type of claim can any shareholder commence against the company
derivative claim
33
What type of petition can any shareholder bring for unfair prejudice
section 994
34
What type of winding up petition can any shareholder bring
just and equitable
35
What percentage of shareholders can require directors to call a GM
five percent
36
What can five percent of shareholders require circulation of regarding resolutions
written statements
37
What can five percent of shareholders circulate
written resolution
38
What percentage of shareholders can demand a poll vote under MA 44
ten percent
39
What percentage of shareholders can block a special resolution
over twentyfive percent
40
What percentage is needed to pass a special resolution
seventyfive percent or more
41
What percentage of shareholders can pass or block an ordinary resolution
over fifty percent
42
What percentage is needed to pass an ordinary resolution
over fifty percent
43
What happens if a shareholder owns exactly fifty percent of shares for an ordinary resolution
can block but not pass
44
What is the principle for shareholder decisions
majority rule
45
What type of resolutions need a simple majority
ordinary resolutions
46
What type of resolutions need seventyfive percent support
special resolutions
47
What can majority rule cause for minority shareholders
problems
48
What acts as a contract between members and the company
the Articles
49
What section allows shareholders to sue for infringed membership rights
section 33 CA 2006
50
What is a simpler way to protect minority shareholder interests than CA 2006
Shareholders Agreements
51
What section of CA 2006 allows shareholders to remove a director
s1681
52
What type of resolution is needed to remove a director
ordinary resolution
53
Can the board usually remove a director
no
54
Can director shareholders vote on their own removal
yes
55
What type of notice is required for a removal resolution
special notice
56
How many clear days notice is special notice
twenty eight
57
Can a written resolution be used to remove a director
no
58
To whom must shareholders give notice of a removal resolution
the company
59
How many clear days before a GM is special notice required
twenty eight
60
Who usually decides GM matters
the board
61
What are the boards options upon receiving a removal resolution notice
place on agenda or not
62
If the board places the resolution on the agenda when should notice be given to shareholders
same time as GM notice
63
How many clear days notice of the removal resolution must the board give shareholders
fourteen
64
If GM notice is already sent how else can removal resolution notice be given
advertisement or Articles mode
65
Why must the board notify all shareholders of a removal resolution
other shareholders may be unaware
66
Are directors obligated to put a removal resolution on the agenda
no
67
What case supports the boards discretion on agenda placement
Pedley v Inland Waterways Association Ltd
68
What might shareholders need to do if the board ignores a removal resolution
force directors to call a GM
69
What section of CA 2006 allows shareholders to require a GM
s303
70
What percentage of voting share capital is needed for a section 303 request
not less than five percent
71
To whom is a section 303 request served
the company the board
72
What must a section 303 request state
general nature of business
73
Can a section 303 request include the resolution text
yes
74
Is the power to require a GM limited to removal resolutions
no
75
How many days does the board have to call a GM upon receiving a section 303 request
twenty one
76
Within how many days of the notice must a board called GM be held
twenty eight
77
Who can call a GM if the board fails to do so
shareholders who submitted the request
78
What voting rights threshold is needed for shareholders to call their own GM
more than one half
79
How many clear days notice is needed for a shareholder called GM
fourteen
80
Within how many months of the section 303 request must a shareholder called GM be held
three
81
Can shareholders recover expenses for calling their own GM
yes
82
From whom can the company recoup shareholder called GM expenses
the directors
83
What two notices might unhappy shareholders send simultaneously
special notice and section 303
84
What does sending both notices simultaneously ensure
resolution is heard or shareholders can call GM
85
Within how many days must the board decide whether to call a GM after a section 303 notice
twenty one
86
Within how many days of calling it must a board called GM be held
twenty eight
87
When does the board lose control if they dont cooperate with a section 303 notice
day twenty three
88
How many clear days notice do unhappy shareholders need to give for their GM if the board doesnt cooperate
fourteen
89
Within how many months of the section 303 request must a shareholder called GM be held if the board doesnt cooperate
three
90
What must the company do upon receiving a removal resolution notice
send a copy to the director
91
Is the board obliged to send the notice to the director even if they dont put it on the agenda
yes
92
What right does the director have regarding the removal resolution
make written representations
93
What length should the directors written representations be
reasonable length
94
What should happen to the directors representations if received in time
circulated to members
95
What should happen to the directors representations if not circulated
read out at the GM
96
What other right does the director have at the GM
right to be heard
97
What should always be checked for director shareholder protection
the articles
98
What type of clause in articles can give weighted voting rights
Bushell v Faith
99
When might a Bushell v Faith clause be found
smaller companies
100
What other agreement should be checked for similar director protection provisions
shareholders agreement
101
What should the articles also be checked for regarding outgoing directors
transfer provisions
102
What might transfer provisions in articles or agreements require
director to transfer shares
103
How many votes per share would B need to stop A and C removing him if A has 60 B has 20 and C has 20 shares
four
104
Does a Bushell v Faith clause change the ordinary resolution requirement
no
105
What does a Bushell v Faith clause alter
how votes are amassed
106
What is a Bushell v Faith clause considered a matter of
internal management
107
Will courts usually intervene in Bushell v Faith clauses
no
108
What might a shareholders agreement require for director removal
unanimous consent
109
Does unanimous consent in a shareholders agreement override the statutory removal right
no
110
If a director is removed by simple majority against a unanimous consent clause what happens
resolution is valid breach of agreement
111
What remedies might a director have for breach of a unanimous consent clause
claim for breach or injunction
112
What might a director be entitled to for loss of office
compensation
113
Who must approve compensation to a director of a holding company
that companys shareholders
114
Is shareholder approval needed for compensation by a wholly owned subsidiary
no
115
To whom do rules on compensation payments also apply
person connected to director
116
What document detailing payment particulars must be available to shareholders
a memorandum
117
How many days before the GM must the payment memorandum be available
fifteen
118
What other payments for loss of office require shareholder approval
on transfer of undertaking or shares in takeover
119
What type of resolution terminates a directors appointment
ordinary resolution
120
How many clear days notice of removal resolution must shareholders give the board
twenty eight
121
Is the board required to put a removal resolution on the GM agenda
no
122
What notice can shareholders serve to require the board to call a GM
section 303
123
How many days does the board have to call a GM after a section 303 notice
twenty one
124
If the board fails to call a GM can shareholders call one themselves
yes
125
What clauses in articles can protect director shareholders
Bushell v Faith
126
What other agreement can protect director shareholders
shareholders agreement
127
What approval is usually needed for director compensation
shareholder approval
128
What type of claim is derived from the companys right of action
derivative claim
129
What case established the rule that the company is the proper claimant for wrongs done to it
Foss v Harbottle
130
What is the principle of Foss v Harbottle
minority shareholder cannot sue for company wrong
131
What section of CA 2006 sets out the procedure for derivative claims
s260
132
What does section 260 CA 2006 allow shareholders to do
bring a derivative claim
133
What must directors have breached for a section 260 claim
statutory duties
134
Is section 260 CA 2006 a common law remedy
no
135
Is section 260 CA 2006 a statutory exception to Foss v Harbottle
yes
136
Does section 260 provide a wider range of circumstances for derivative claims
yes
137
Whose wider duties does the statutory right support enforcement of
directors
138
To whom is any remedy granted in a derivative claim
the company itself
139
Who initiates a derivative claim under section 260 CA 2006
a member
140
In respect of what type of action is a derivative claim brought
cause of action vested in the company
141
Seeking what type of relief is a derivative claim brought
relief on behalf of the company
142
From what type of act or omission can a derivative claim arise
negligence default breach of duty breach of trust
143
By whom must the act or omission be committed for a derivative claim
a director
144
Does breach of duty include common law duties
yes
145
Must a director have personally benefited for a derivative claim
no
146
Who is included in the definition of director for section 260
shadow directors former directors
147
What sections of CA 2006 list the statutory duties of directors
ss170 to 177
148
Against whom can a derivative claim be brought
the director or another person
149
Against whom will a cause of action only arise
actions or omissions of a director
150
May third parties be defendants in a derivative claim
yes
151
In what narrow circumstances are claims against third parties usually permitted
third party knew about directors breach
152
From what common law concept do claims against third parties derive
knowing assistance
153
Who must bring a derivative claim under section 260 CA 2006
a member
154
Is it relevant when the member acquired shares for a derivative claim
no
155
Can a former member bring a derivative claim
no
156
How many stages are there to bringing a derivative claim
two
157
What must the member obtain at the first stage
permission of the court
158
What must the member make out at the first stage
a prima facie case
159
In what circumstances must the court refuse permission to continue a claim
person acting under s172 would not continue
160
What duty is mentioned in section 263 subsection 2
duty to promote the success of the company
161
If not an absolute bar what must the court take into account
factors in s263 subsection 3
162
What factors are included in section 263 subsection 3
good faith ratification
163
What does the court consider at the second stage
particular criteria
164
To whose views must the court have particular regard at the second stage
members with no personal interest
165
Why was the provision regarding disinterested members introduced
harder for single member to act against wishes
166
What was the requirement for court permission designed as
counterbalance to extended rights
167
Did the anticipated increase in successful derivative claims materialize
no
168
What approach have courts generally adopted regarding permission to continue claims
restrictive approach
169
What does the court decide at stage one
if a prima facie case exists
170
What happens if no prima facie case exists
dismiss claim
171
What happens if a prima facie case exists
case proceeds to stage two
172
What happens at stage two
detailed consideration including other members views
173
What is the ultimate step after stage two
trial
174
What statutory right does any member have under section 260 CA 2006
bring a derivative claim
175
On whose behalf is a derivative claim brought
on behalf of the company
176
Against whom can a derivative claim be brought
directors and third parties
177
What must the cause of action involve by a director
negligence default breach of duty or trust
178
To whom is any remedy granted in a derivative claim
to the company
179
How many stages are there in a derivative claim process
two
180
Are derivative claims common in practice
no
181
What section of CA 2006 covers unfair prejudice
s994
182
What section of IA 1986 covers just and equitable winding up
s122
183
What is a ground for an unfair prejudice action
unfairly prejudicial conduct
184
What are excessive director remuneration and nonpayment of dividends examples of
unfairly prejudicial conduct
185
For whom does a shareholder sue in an unfair prejudice action
for themselves
186
For whom does a shareholder sue in a derivative action
on behalf of the company
187
What test does the court use to assess unfair prejudice
reasonable bystander test
188
What case established the objective test for unfair prejudice
Re Guidezone Limited
189
Is negligent management usually unfair prejudice
no
190
What type of mismanagement might be unfair prejudice
serious or repeated
191
Are disagreements on company policy usually unfair prejudice
no
192
Is bad faith required to show unfair prejudice
no
193
What might a breach of articles be considered unfair prejudice
equitable considerations
194
Is claimant conduct irrelevant in unfair prejudice
no
195
What type of remuneration can be unfairly prejudicial
excessive remuneration
196
What expectation might shareholders in quasi partnerships have
involvement in management
197
What section of CA 2006 allows the court to grant remedies for unfair prejudice
s996 subsection 1
198
What section lists particular types of unfair prejudice orders
s996 subsection 2
199
What is the most common unfair prejudice remedy
purchase of petitioners shares
200
Who usually purchases the petitioners shares
the wrongdoers
201
Is it common for minority shareholders to buy out majority shareholders in unfair prejudice
no
202
What is a fundamental issue in share purchase remedies
valuation of shares
203
Does the court have wide discretion in valuation matters
yes
204
What is the courts aim in valuation
to set a fair price
205
Should shareholders first try to use an articles valuation mechanism
yes if fair
206
Will courts usually discount minority shareholdings in unfair prejudice cases
no generally
207
When might a court order a discount on minority shares
investment holding commercial operation
208
What is the general valuation date for unfairly prejudiced shares
date of court order
209
Can the petitioners behavior be relevant to valuation
yes
210
What might the court encourage for valuation disputes
out of court settlement
211
What might the court require if a petitioner objects to out of court settlement
reasons for objection
212
Might a section 994 petition be unsuitable if a shareholder wants to avoid selling
yes
213
Are section 994 petitions usually cheap
no
214
Are section 994 petitions usually quick
no
215
Are section 994 petitions usually simple
no
216
Do section 994 petitions involve uncertainty for the petitioner
yes
217
What is often the preferred option over court action
negotiated settlement
218
What is the final and most drastic shareholder remedy
just and equitable winding up
219
What section of IA 1986 allows just and equitable winding up petitions
s122 subsection 1 paragraph g
220
What happens to a company when it is wound up
its life ends
221
Is winding up usually a mild remedy
no
222
Does the court have discretion in just and equitable winding up
yes
223
Is it common to bring section 122 and section 994 petitions together
yes
224
Who can bring an unfair prejudice claim
any shareholder
225
Against whom is an unfair prejudice claim brought
against the company
226
Where are the orders for relief in unfair prejudice set out
section 996 CA 2006
227
What is the most common unfair prejudice order
buy out of claimant shares
228
Is it common for minority shareholders to petition for just and equitable winding up
rare
229
On what grounds is a just and equitable winding up petition made
just and equitable to do so
