Corporate Laws Summary notes on Meetings
1. Shareholders and Shares
Day to day management of a company is in the hands of the directors, not the shareholders - but the shareholders retain some important powers - many decisions require a resolution of the shareholders and cannot be decided by the directors alone. (a) Who is a "Member" (i) Anyone who subscribes the memorandum. (ii)Any other person who agrees to become a member and whose name is entered on the register of members. (b) Register of Members CA 1985, s.352 requires every company to keep a register of its members. The register must show: - name and address of each member. - date person became a member and, where applicable, the date he ceased to be a member. - the number of shares held by each member and the amount paid on them
2. Kinds of Meetings
(a) Annual General Meeting Most companies must hold an AGM. (i) CA 1985 s.366 provides that an AGM must be held every calendar year with not more than 15 months between meetings. A newly incorporated company must hold its first AGM within 18 months of incorporation. (ii) CA 1985 s.367 - if a company does not hold an AGM as required, any member can apply to the Secretary of State to call or to direct the calling of the meeting. (iii) CA 1985 s.366A - members of a private company can choose to dispense with the holding of an AGM by elective resolution - but any member of such a company can require that an AGM be held in a particular year by giving notice at least 3 months before the end of the year. (iv) CA 1985 s.371 - if it is impracticable to call a meeting or conduct a meeting in the manner prescribed by the company’s articles, any member or director who would be entitled to vote can apply to the court which can order the meeting to be called or held. Re Sticky Fingers Restaurant Ltd (Case 53) (b) Usual Business of an AGM (i) Directors lay before the company annual accounts and reports for t the most recent financial period. (ii) Auditor's term of office ends at AGM, so they must be re-appointed or new auditors must be appointed. (iii) Director's recommendation for the dividend to be paid to shareholders will be voted on. (iv) The Articles may provide that directors are to retire in rotation. Some directors will retire at the AGM and must be re-appointed or replaced. (v) Resolutions may be required to pay directors’ and auditors’ fees. (Now normally fixed by contract). (vi) Shareholders may have their own resolutions placed on the agenda. (c) Extraordinary General Meetings
Any meeting which is not an AGM. Table A provides that only directors can call an EGM, unless there are too few directors in the UK to make up a quorum - then any member can call one. CA 1985, s.368 - directors must call an EGM if requisitioned by holders of 10% of the paid up capital of the company. CA 1985, s.371 - power of the court to order the holding of an AGM also applies to EGMs. CA 1985, s.142 - public company must hold an EGM if the company’s net assets have fallen to less than half of its called up capital. Meeting must be called within 28 days of the directors becoming aware of the loss of capital, and must be held within 56 days of that date. CA 1985, s.392A - where auditor has resigned and has made a statement of circumstances he thinks should be brought to the attention of creditors and shareholders - the auditor can requisition the directors to hold an EGM so that he can explain the circumstances of his resignation. 3. Convening Meetings (a) Notice of Meetings (i) Authority to Call a Meeting Authority normally rests with the directors. If person without authority issues notice of a meeting the notice is void. (ii) Who must be notified? Depends on the Articles. Table A provides that notice must be given to all shareholders, directors and auditors. Failure to notify someone entitled to notice will invalidate the meeting unless the failure was purely accidental: Young v Ladies Imperial Club (Case 54) Re West Canadian Collieries Ltd (Case 55) (iii) Method of Service
Articles can provide for any method - Table A requires written notice to be delivered personally or by post. Bradman v Trinity Estates Ltd (Case 56) The Companies Act 1985 (Electronic Communications) Order 2000 allows notice to be given by electronic means such as via a website provided the member agrees to being given notice in this way. (iv) Length of Notice Articles can set any length of notice, but by s.369, notice must be at least 21 days for an AGM, or 14 days for an EGM - unless all members agree shorter notice period. (v) Contents of Notice Set out by articles. Table A requires notice to specify date, time and place of meeting and a general indication of business to be dealt with. Notice must state if meeting is an AGM. If meeting is being convened to pass a special or extraordinary resolution, or a resolution for which special notice is required, these resolutions must be set out in full in the notice. Notice will be invalid unless it contains enough detail to allow a reasonable shareholder to judge whether he needs to attend the meeting. Baillie v Oriental Telephone & Electric Co Ltd (Case 57) (vi) Special Notice Some kinds of resolution require special notice to be given: - resolution to dismiss a director - resolution to appoint replacement director at same meeting as dismissal. - appointment or retention of public company director aged 70 or over. - resolutions concerning dismissal or appointment of auditors. Special notice = at least 28 days notice to the company of the intention to move the resolution. The company must then give the members at least 21 days notice of the meeting.
4. Conduct of Meetings (a) Quorum "Quorum" = the minimum number of persons who must be present before the meeting will be valid. Articles can provide for any quorum: Table A requires two members entitled to vote, or their proxies. If Table A has been excluded without providing an alternative, CA 1985 s.370 requires two members personally present. Single Member Private Companies - one member will form a quorum, notwithstanding anything in the articles. A meeting held without a quorum cannot validly transact any business: Sharp v Dawes (Case 58) (b) Chairman Usual to have a chairman to preside over a meeting - Table A provides this should be the chairman of the board or another director nominated by the board. Chairman’s role is to keep order - he/she has no power to adjourn or dismiss a meeting unless this is specified in the articles. Chairman has no casting vote unless given one by the articles. (Table A gives a casting vote.) (c) Minutes Companies must keep minutes of general meetings at the registered office for inspection by members. Chairman signs the minutes - they then become prima facie evidence of what occurred at the meeting. (d) Voting and Proxies CA 1985 s.372 - all companies must allow a member who cannot attend a meeting to allow a proxy to vote in his place
Appointment of proxy must be in writing and lodged with company at least 48 hours before meeting. There are two methods of voting at company meetings: (i) Show of Hands Voting can be by show of hands unless articles provide otherwise. Each member has just one vote regardless of number of shares he has - hands are counted and the result declared by the chairman. Result is conclusive once recorded in the minutes. Proxies cannot vote on a show of hands unless the Articles allow this. (ii) Voting by Poll A company cannot refuse a demand for a poll made by: - at least 5 members having the right to vote, or - any member/members representing one-tenth or more of the total voting rights. Members normally have one vote per share in a poll. Members are entitled to exercise their votes according to their own interests. Northern Counties Securities Ltd v Jackson & Steeple (Case 59) 5. Resolutions (a) Special Resolutions Requires vote of 75% of members present in person or by proxy, who are entitled to vote and do vote. Meeting at which resolution is proposed must have had at least 21 days notice, unless shorter period was agreed by majority in number of members holding at least 95% of the shares. Certain matters can only be decided by special resolution and the articles cannot provide to the contrary
Printed copy of special resolution must be sent to Registrar within 15 days of it being passed.
(b) Extraordinary Resolutions
Same requirements as for special resolution except for notice period required, which depends on type of meeting. (21 days for AGM, 14 days for EGM - shorter notice possible by agreement). Extraordinary resolution must be used: - for voluntary winding up when company cannot pay its debts (IA 1986 s.84(1)) - to authorise a liquidator to make an arrangement with creditors in members’ voluntary winding up (IA 1986 s.165(2)) (c) Elective Resolutions Apply only to private companies. s.379A CA 1985 lists circumstances - e.g. election to dispense with AGM. Requires 21 days notice of meeting - resolution must be supported by all members entitled to attend and vote. Must be filed with Registrar within 15 days of being passed. An elective resolution can be revoked by an ordinary resolution - which must also be filed with the Registrar within 15 days. (d) Ordinary Resolutions Most matters can be decided by ordinary resolution and some must be (e.g. decision to remove a director). Ordinary resolution requires simple majority - 50% + 1 vote of members present in person or by proxy. (e) Written Resolutions CA 1985 s.381A - allows private company to pass resolutions without holding meetings.Written resolution is passed by being signed by or on behalf of all members who would be entitled to attend and vote at a meeting. Companies cannot be restricted from using s.381A procedure by anything in the articles. Resolutions to remove a director or an auditor before his term of office has expired cannot be taken by written resolution.
Day to day management of a company is in the hands of the directors, not the shareholders - but the shareholders retain some important powers - many decisions require a resolution of the shareholders and cannot be decided by the directors alone. (a) Who is a "Member" (i) Anyone who subscribes the memorandum. (ii)Any other person who agrees to become a member and whose name is entered on the register of members. (b) Register of Members CA 1985, s.352 requires every company to keep a register of its members. The register must show: - name and address of each member. - date person became a member and, where applicable, the date he ceased to be a member. - the number of shares held by each member and the amount paid on them
2. Kinds of Meetings
(a) Annual General Meeting Most companies must hold an AGM. (i) CA 1985 s.366 provides that an AGM must be held every calendar year with not more than 15 months between meetings. A newly incorporated company must hold its first AGM within 18 months of incorporation. (ii) CA 1985 s.367 - if a company does not hold an AGM as required, any member can apply to the Secretary of State to call or to direct the calling of the meeting. (iii) CA 1985 s.366A - members of a private company can choose to dispense with the holding of an AGM by elective resolution - but any member of such a company can require that an AGM be held in a particular year by giving notice at least 3 months before the end of the year. (iv) CA 1985 s.371 - if it is impracticable to call a meeting or conduct a meeting in the manner prescribed by the company’s articles, any member or director who would be entitled to vote can apply to the court which can order the meeting to be called or held. Re Sticky Fingers Restaurant Ltd (Case 53) (b) Usual Business of an AGM (i) Directors lay before the company annual accounts and reports for t the most recent financial period. (ii) Auditor's term of office ends at AGM, so they must be re-appointed or new auditors must be appointed. (iii) Director's recommendation for the dividend to be paid to shareholders will be voted on. (iv) The Articles may provide that directors are to retire in rotation. Some directors will retire at the AGM and must be re-appointed or replaced. (v) Resolutions may be required to pay directors’ and auditors’ fees. (Now normally fixed by contract). (vi) Shareholders may have their own resolutions placed on the agenda. (c) Extraordinary General Meetings
Any meeting which is not an AGM. Table A provides that only directors can call an EGM, unless there are too few directors in the UK to make up a quorum - then any member can call one. CA 1985, s.368 - directors must call an EGM if requisitioned by holders of 10% of the paid up capital of the company. CA 1985, s.371 - power of the court to order the holding of an AGM also applies to EGMs. CA 1985, s.142 - public company must hold an EGM if the company’s net assets have fallen to less than half of its called up capital. Meeting must be called within 28 days of the directors becoming aware of the loss of capital, and must be held within 56 days of that date. CA 1985, s.392A - where auditor has resigned and has made a statement of circumstances he thinks should be brought to the attention of creditors and shareholders - the auditor can requisition the directors to hold an EGM so that he can explain the circumstances of his resignation. 3. Convening Meetings (a) Notice of Meetings (i) Authority to Call a Meeting Authority normally rests with the directors. If person without authority issues notice of a meeting the notice is void. (ii) Who must be notified? Depends on the Articles. Table A provides that notice must be given to all shareholders, directors and auditors. Failure to notify someone entitled to notice will invalidate the meeting unless the failure was purely accidental: Young v Ladies Imperial Club (Case 54) Re West Canadian Collieries Ltd (Case 55) (iii) Method of Service
Articles can provide for any method - Table A requires written notice to be delivered personally or by post. Bradman v Trinity Estates Ltd (Case 56) The Companies Act 1985 (Electronic Communications) Order 2000 allows notice to be given by electronic means such as via a website provided the member agrees to being given notice in this way. (iv) Length of Notice Articles can set any length of notice, but by s.369, notice must be at least 21 days for an AGM, or 14 days for an EGM - unless all members agree shorter notice period. (v) Contents of Notice Set out by articles. Table A requires notice to specify date, time and place of meeting and a general indication of business to be dealt with. Notice must state if meeting is an AGM. If meeting is being convened to pass a special or extraordinary resolution, or a resolution for which special notice is required, these resolutions must be set out in full in the notice. Notice will be invalid unless it contains enough detail to allow a reasonable shareholder to judge whether he needs to attend the meeting. Baillie v Oriental Telephone & Electric Co Ltd (Case 57) (vi) Special Notice Some kinds of resolution require special notice to be given: - resolution to dismiss a director - resolution to appoint replacement director at same meeting as dismissal. - appointment or retention of public company director aged 70 or over. - resolutions concerning dismissal or appointment of auditors. Special notice = at least 28 days notice to the company of the intention to move the resolution. The company must then give the members at least 21 days notice of the meeting.
4. Conduct of Meetings (a) Quorum "Quorum" = the minimum number of persons who must be present before the meeting will be valid. Articles can provide for any quorum: Table A requires two members entitled to vote, or their proxies. If Table A has been excluded without providing an alternative, CA 1985 s.370 requires two members personally present. Single Member Private Companies - one member will form a quorum, notwithstanding anything in the articles. A meeting held without a quorum cannot validly transact any business: Sharp v Dawes (Case 58) (b) Chairman Usual to have a chairman to preside over a meeting - Table A provides this should be the chairman of the board or another director nominated by the board. Chairman’s role is to keep order - he/she has no power to adjourn or dismiss a meeting unless this is specified in the articles. Chairman has no casting vote unless given one by the articles. (Table A gives a casting vote.) (c) Minutes Companies must keep minutes of general meetings at the registered office for inspection by members. Chairman signs the minutes - they then become prima facie evidence of what occurred at the meeting. (d) Voting and Proxies CA 1985 s.372 - all companies must allow a member who cannot attend a meeting to allow a proxy to vote in his place
Appointment of proxy must be in writing and lodged with company at least 48 hours before meeting. There are two methods of voting at company meetings: (i) Show of Hands Voting can be by show of hands unless articles provide otherwise. Each member has just one vote regardless of number of shares he has - hands are counted and the result declared by the chairman. Result is conclusive once recorded in the minutes. Proxies cannot vote on a show of hands unless the Articles allow this. (ii) Voting by Poll A company cannot refuse a demand for a poll made by: - at least 5 members having the right to vote, or - any member/members representing one-tenth or more of the total voting rights. Members normally have one vote per share in a poll. Members are entitled to exercise their votes according to their own interests. Northern Counties Securities Ltd v Jackson & Steeple (Case 59) 5. Resolutions (a) Special Resolutions Requires vote of 75% of members present in person or by proxy, who are entitled to vote and do vote. Meeting at which resolution is proposed must have had at least 21 days notice, unless shorter period was agreed by majority in number of members holding at least 95% of the shares. Certain matters can only be decided by special resolution and the articles cannot provide to the contrary
Printed copy of special resolution must be sent to Registrar within 15 days of it being passed.
(b) Extraordinary Resolutions
Same requirements as for special resolution except for notice period required, which depends on type of meeting. (21 days for AGM, 14 days for EGM - shorter notice possible by agreement). Extraordinary resolution must be used: - for voluntary winding up when company cannot pay its debts (IA 1986 s.84(1)) - to authorise a liquidator to make an arrangement with creditors in members’ voluntary winding up (IA 1986 s.165(2)) (c) Elective Resolutions Apply only to private companies. s.379A CA 1985 lists circumstances - e.g. election to dispense with AGM. Requires 21 days notice of meeting - resolution must be supported by all members entitled to attend and vote. Must be filed with Registrar within 15 days of being passed. An elective resolution can be revoked by an ordinary resolution - which must also be filed with the Registrar within 15 days. (d) Ordinary Resolutions Most matters can be decided by ordinary resolution and some must be (e.g. decision to remove a director). Ordinary resolution requires simple majority - 50% + 1 vote of members present in person or by proxy. (e) Written Resolutions CA 1985 s.381A - allows private company to pass resolutions without holding meetings.Written resolution is passed by being signed by or on behalf of all members who would be entitled to attend and vote at a meeting. Companies cannot be restricted from using s.381A procedure by anything in the articles. Resolutions to remove a director or an auditor before his term of office has expired cannot be taken by written resolution.
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