#10125 - Procedure Table A Articles - Business Law and Practice

• TA88: must be given to all the Ds before the meeting (but not if he’s out of the UK)

• Re Homer: it must be reasonable notice

• Re Trinidad: Notice may be oral

• Apply to the facts: has there been reasonable notice? If so, why?

In a Proposed Transaction (s.177)

• Direct or indirect (e.g. a spouse) interest, then it must be declared to the other directors (s.177(1))

• There are some exceptions:

  • D is not aware of either the interest or transaction (s.177(5))

  • If interest cannot reasonably be regarded as likely to give rise to a conflict of interest (s.117(6)(a))

  • If other Ds are already aware (s.117(6)(b))

  • If it concerns the terms of his service contract (s.117(6)(c))

  • A sole D need not make a declaration

• However, regardless of the above exceptions, it is always good practice to declare any interest

• The nature and extent of his interest must be made:

  • Before the transaction is entered into (s.177(4))

  • At a BM or by notice in according with s.184 (in writing to other Ds) or s.185 (general notice)

  • If becomes inaccurate, a further declaration needed (s.177(2))

• The effects of making the declaration are that:

  • The D can’t vote or count in the quorum (TA95)

  • Unless: TA94 exceptions:

    • The interest is a guarantee/indemnity that benefits the members

    • The interest is that shares are being subscribed to

  • Members can by OR suspend or relax the TA95 provision temporarily (TA96)

In an Existing Transaction (s.182)

• Direct or indirect (e.g. a spouse) interest (s.182(1))

• The same exceptions as above

• The nature and extent of his interest must be made:

  • As soon as reasonably practicable (s.182(4))

  • At a BM (s.182(2)) or by notice as per s.184 (in writing) or s.185 (general notice)

  • Further declaration made if it becomes inaccurate (s.182(2))

• The effects of making the declaration are the same as above

• A D who fails to declare under s.183 commits a criminal offence

• Apply to the facts: what is the interest? Has the declaration been made?

• After due and careful consideration, the Board resolves to:

1. Call a GM or circulate a WR (s.302)

2. [adopt new articles SR (s.21)]

3. [appoint a new director, effected when resolution says]

4. [approve and circulate the proposed buy-back contract]

5. [approve the draft terms of the loan [subject to GM] – s.197]

6. [call a GM for S’holders to pass OR for the proposed loan to D - s.197]

7. [approve the terms of the contract [subject to GM]]

8. [approve the wording of the signage and order it]

9. [approve to change the name SR (s.77)]

10. [authorise 2 Ds to sign – ss.43/44]

11. [change accounting reference date – s.392]

12. [change the address of the registered office – s.87]

13. [change the stationary]

• Apply to the facts: have these been passed? See TA95 on ability to vote. What combination of Ds are needed to pass?

• Director (s.302)

• Shareholder (s.305(1)):

  • They must first request Ds to call one (s.303)

  • The members together must own 5% of voting rights

  • Ds then have 21 days to call a GM not to be held more than 28 days after notice calling the meeting

• Court (s.306)

• Auditor (s.518)

• s.318(2)/TA40: 2 persons (unless a single member company in which case 1 (s.318(1)))

• Directors may attend and speak irrespective of whether they are members (TA44)

• Auditors may attend (s.502(2))

• A proxy can count in the quorum, but not if he is the only one there (s.324(1))

• Chairman will adjourn if someone leaves and becomes inquorate (TA41)

• s323 of the CA 2006 allows a company's directorsto appoint a representative to act on its behalf at general meetings.

• Apply to the facts: who is to attend for the resolutions to be passed? How are the members likely to vote?

Default position is that voting is to be decided at a general meeting by a show of hands, unless a poll is demanded.

• Members must vote on resolutions in order to take decisions (s.281(1)(b))

On a Show of Hands

• Default is a show of hands for a resolution unless a poll vote is demanded

• Every member has one vote (s.284(2)/TA54)

• Proxies can vote (TA59)

Poll Vote (preferred by shareholders with large number of shares in Co)(Each shareholder has one vote for every share he owns s.284(3))

• One vote per share (ss.282 & 283/TA54)

• Demanded by any member or proxy (s.321(1))

• It may be demanded by (TA46):

  1. The Chairman;

  2. Two or more people having the right to vote on the resolution ; or

  3. A person or persons representing not less than one-tenth of the total voting rights of all the members having the right to vote on the resolution

  4. by a member or members holding shares conferring a right to vote at the meeting being shares on which an aggregate sum has been paid up equal to not less than one-tenth of the total sum paid up on all the shares conferring that right;

• It should be demanded (TA54):

  • In advance of the GM where it is to be put to the vote; or

  • At the GM either before the show of hands or immediately after

Is it Passed?

• Ordinary Res : require simple majority (50%+1) (shows of hands s.282(3); poll s.282(4))

• Special Res: require a majority of at least 75% of votes (show of hands s.283(4); poll s.283(5))

Important point to NOTE is that these majorities are based on votes cast at the meeting, not the total possible votes that could have been cast across all shareholders.

Unanimity (is as valid as a formal resolution)

• There is no need for formal voting or convention if all members who have the right to vote are unanimous in the decision (Re Duomatic)