Week 4 Law

Cards (29)

  • Annual General Meetings (AGMs)

    Meetings that public companies must hold within 6 months of their financial year
  • Failure to hold an AGM can result in the company and every director/company secretary responsible being fined. Any shareholder can apply to the Department for Innovation and Skills to convene a meeting.
  • Notice required for AGMs
    21 days' notice is needed, unless every shareholder entitled to attend agrees to a shorter period. The notice must state it is an AGM.
  • What is typically discussed at an AGM
    • Presentation of the accounts
    • Appointment of auditors
    • Declare dividends
  • Resolutions at AGMs
    Members with >5% of voting rights (or > 100 members holding an average of £100 paid-up capital) have the right to propose a resolution
  • General meetings
    Meetings that can be called any time they are required, but must be held by a Public Co if a serious loss of capital has occurred
  • Notice required for general meetings
    At least 14 days
  • The person who requests a general meeting sets the agenda - this is typically the board of directors.
  • Who can call a general meeting
    • Directors
    • Members with > 5% of the voting rights
    • Resigning auditors
    • Court
  • Notice
    Notification that a meeting is going to take place
  • Who must receive notice
    • Every member and every director
  • Accidental failure to give notice does not invalidate the meeting
  • Contents of the notice
    • Date, time, and place of the meeting
    • The general nature of the matters to be discussed
    • The text of any special resolutions
  • Length of notice period
    AGM - 21 days, General Meetings - 14 days
  • "Special notice"
    28 days' notice required for the removal of a director or auditor
  • Resolutions
    The way that companies take decisions, voted on by the members in person or by proxy
  • Types of resolutions
    • Special (>75% required, must be registered)
    • Ordinary (>50% required, only if required by statute)
  • Written resolutions can be passed by private companies only, which is easier than convening a meeting and holding a vote of shareholders.
  • Quorum
    The minimum number of members needed to make a meeting valid, generally two but the Articles may stipulate a higher number
  • Voting
    Initially by a simple show of hands, unless a poll is demanded by shareholders with at least 10% of the total voting rights, which ensures a one vote per share basis
  • Director
    Any person occupying the position of director, by whatever name called
  • Types of directors
    • De Jure (formally and legally appointed)
    • De Facto (not formally appointed but carries on the role)
    • Shadow (person whose directions the directors are accustomed to act on)
    • Executive (full time employee involved in management)
    • Non-executive (part time, perform corporate governance function)
    • Managing (appointed to carry out day-to-day management)
    • Chair of the board (perform corporate governance function, act as spokesman)
    • Chief executive officer (responsible for strategic leadership)
    • Alternative (appointed by a director to attend and vote at board meetings)
  • Appointment of directors
    1. First directors appointed in Statement of Proposed Officers
    2. Subsequent appointments usually made by existing directors or by ordinary resolution of shareholders
    3. Must notify Registrar within 14 days of appointment
  • Removal of directors by ordinary resolution
    1. Shareholder(s) must give 28 days' "special notice" of general meeting
    2. Company must forward notice to director concerned
    3. Company must properly notify shareholders
    4. Director must be given chance to write to shareholders
    5. Ordinary resolution (50% majority) required at properly convened meeting
  • Limitation on shareholder power to remove directors - a director who is also a shareholder can be protected by giving weighted voting rights in the Articles (Bushell v Faith)
  • Grounds for disqualification of directors
    • General misconduct in connection with companies
    • Disqualification for unfitness
    • Other reasons (fraudulent trading, wrongful trading, undischarged bankruptcy)
  • Breach of a disqualification order is a criminal offence punishable by fine/imprisonment, and the disqualified director becomes personally liable for the debts of the company
  • Types of director authority
    • Express/Actual
    • Implied/Usual
    • Apparent/Ostensible
  • If a director acts outside their authority, the contract is not binding on the company, unless the board chooses to ratify it. The director may also be personally liable.