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SGS 2 & 5: Company Decision Making & Company Procedure
Ordinary & Special Resolutions
Examples of SH decisions
a. Special Resolutions affecting a Company’s Constitution must be forwarded to Registrar within 15 days
s.29- Resolutions and agreements affecting a company’s constitution- include-
1. Special resolution 2. Agreement of all members that if not so agreed, would not be effective unless passed as SR
3.any resolution that binds all members of class of SH though not agreed to by all those members
s.30- Copies of resolutions/agreements affecting a company’s constitution must be forwarded to Registrar- copy
of every resolution or agreement affecting constitution must be forwarded to registrar within 15 days/if not then
offence committed by company and every officer in default
b. Change of Name [could be by Ds only if AoA allow]
s.77- Change of name-
(i)requires a special resolution in: GM (see s.78); or
(ii) by other means provided for by the articles (which could include a board resolution)(see s.79); or
(iii) can be changed by Ds to comply with SoS; or
(iv) due to co names adjudicator/or due to court decision
c. Approve payment out of capital to fund redemption of redeemable shares
s.716(1)- need special resolution to approve payment out of capital to fund redemption of redeemable shares
EXAMPLE: Process for SH special resolution for change of name:
s.77(1)(a): need SR
s.302: Ds call GM
s.283(1): SR needs majority of not less than 75%
MA 42: must be on show of hands unless poll demanded
s.283(4): SR for show of hands needs majority of not less than 75% of votes cast
o N.B. s.284(2): 1 vote for each SH present
MA 44(1): losing SH can then demand a poll vote either:
o 2/more SH; or
o SH(s) with not less than 10% of total voting rights of all SHs having right to vote.
s.283(5): SR for poll vote needs majority of not less than 75% of total voting rights of those who vote
o N.B. s284(3): 1 vote for each share
c. Directors’ Long Term Service Contract (2yrs or more)
s.188-Transactions with directors requiring approval of members: D’s Long-Term Service Contracts require
member’s approval - s.188 applies where service contract guarantees longer than 2 yr term/guaranteed term
defined where contract cannot be terminated by C and only in specified circumstances e.g. misconduct/therefore
s.188 applies where D has service contract for 1yr but has option to renew at his discretion.
*NB requires an ordinary resolution by default unless AoA requires higher majority [s.281(3)]
EXAMPLE: Process for SH approval of a D’s long-term service contract:
s.188(2): need “resolution of the members”
s.281(3): not specified therefore it is an ordinary resolution by default
s.282(1): OR needs simple majority (more than 50%):
MA 42: must be on show of hands unless poll demanded
s.282(3): OR for show of hands just need simple majority of votes cast (more than 50%):
o N.B. s.284(2): 1 vote for each SH present
MA 44(1): losing SH can then demand a poll vote either:
o 2/more SH; or
o SH(s) with not less than 10% of total voting rights of all SHs having right to vote.
s.282(4): OR for poll vote need simple majority of total voting rights of members who vote
o N.B. s284(3): 1 vote for each share
d. Removal of a D
s.168(1)- Resolution to remove director: can remove D by ordinary resolution at meeting
C can remove director by ordinary resolution at meeting before expiration of his period of office.
Need special notice of the resolution to remove D under this section.
e. Retrospective Ratification of acts of D
s.239: Ratification of acts of directors:
,(1) SHs can ratify conduct of D [includes former and shadow Ds as well] which is negligence/default/breach of
duty/breach of trust [BUT NOT fraudulent/illegal acts- s.239(7)]
(2) ratification needs OR [i.e. more than 50%] [N.B. unless AoA require higher majority]
(3) if written resolution then D (if SH) or connected member [see s.252, s.253 & s.254] DON’T count as eligible
member
(4) if proposed at SH meeting, then disregard votes of D (if he is a SH) and any connected SH BUT still counted in
the quorum
Ordinary Resolutions
s.281(3)- General provisions about resolutions- Resolutions-where CA 2006 provision requires a resolution but
doesn’t specify what kind of resolution required then it requires an ordinary resolution by default unless AoA
require a higher majority.
s.282- Ordinary Resolutions-
1. passed by simple majority [N.B. this is more than 50% and NOT at least 50% i.e you need 51%];
2.Written resolution passed by simple majority if passed by members representing a simple majority of total
voting rights of eligible members [i.e. all SH not just those that have voted] [s. 284: (i) for Cs with a share capital,
1 vote for each share/ each £10 of stock held; (ii) in any other case every member has 1 vote];
3. Resolution passed at meeting on show of hands passed by simple majority of votes cast by those entitled to
vote [s.284: 1 vote for each member present] [regardless of no. of shares held by SH];
[**N.B. if you are present and abstain from voting then disregarded for purposes of vote on show of hands
or on a poll]
4. Resolution on a poll taken at meeting passed by simple majority of total voting rights of members who vote [s.
284: (i) for Cs with a share capital, 1 vote for each share/ each £10 of stock held; (ii) in any other case every
member has 1 vote]; [**N.B. if you are present and abstain from voting then disregarded for purposes of vote
on a poll and everyone else’s shareholding is proportionately adjusted [someone’s old shareholding % ÷ new
shareholding % (i.e. minus the shareholding of the abstainer) = new proportionate shareholding %]]
5. Anything that may be done by ordinary resolution may also be done by special resolution.
Special Resolutions
s.283- Special Resolutions-
1. need a majority of not less than 75%;
2. Written resolution needs to be passed by:
(i) members representing not less than 75% of the total voting rights of eligible members [s. 284: (i) for Cs with
a share capital, 1 vote for each share/ each £10 of stock held; (ii) in any other case every member has 1 vote];
AND
(ii) must state it was proposed as a special resolution; AND
(iii) must state that it may only be passed as a special resolution.
3. Resolution passed at meeting on show of hands needs:
(i) a majority of not less than 75% of votes cast by those entitled to vote [s.284: 1 vote for each member present
[regardless of no. of shares held by SH]]; AND
(ii) notice of meeting must include the text of the resolution and specify the intention to propose the resolution as a
special resolution; AND
(iii) state that the resolution may only be passed as a special resolution.
[**N.B. if you are present and abstain from voting then disregarded for purposes of vote on show of hands
or on a poll]
4. Resolution passed on poll taken at meeting needs:
(i) a majority of not less than 75% of total voting rights of members who vote [s. 284: (i) for Cs with a share
capital, 1 vote for each share/ each £10 of stock held; (ii) in any other case every member has 1 vote]; AND
(ii) notice of meeting must include the text of the resolution and specify the intention to propose the resolution as a
special resolution; AND
(iii) state that the resolution may only be passed as a special resolution.
[**N.B. if you are present and abstain from voting then disregarded for purposes of vote on a poll and
everyone else’s shareholding is proportionately adjusted [someone’s old shareholding % ÷ new shareholding
% (i.e. minus the shareholding of the abstainer) = new proportionate shareholding %]]
,Votes: General Rules [WR/hands/poll]
s.284- Votes: General Rules-
1. Written resolution: (i) for Cs with a share capital, 1 vote for each share/ each £10 of stock held; (ii) in any
other case every member has 1 vote;
2. Show of hands at meeting: 1 vote for each member present [regardless of no. of shares held by SH];
3. On a poll taken at a meeting: (i) for Cs with a share capital, 1 vote for each share/ each £10 of stock held; (ii)
in any other case every member has 1 vote.
4. BUT voting provisions above can be changed in AoA.
Written Resolutions
Why use written resolutions:
time saving method of passing SH resolutions and avoids need for General Meeting
ordinary resolution passed by simple majority of total voting rights of members (s.282(2))
special resolution can passed by 75% majority (s.283(2))
NOTE:
o percentages for passing SH resolutions as written resolutions are percentages of all eligible
members whereas if vote at GM, only take into account votes of SH who actually vote
o only in private companies can SH pass shareholder resolution using written resolution procedure
under s.288
s.288: Written Resolutions of private companies:
s.288(2): can’t use written resolution to remove a director/auditor;
s.288(3): Ds and SH of a private company can propose written resolution;
s.288(5): written resolution same effect as if passed at general meeting
N.B. only in private companies can SH pass shareholder resolution using written resolution procedure under
s.288
s.289: Eligible members:
Eligible members are those that entitled to vote on circulation date/ if persons entitled to vote change during course
of day then eligible members are those entitled to vote at time 1st copy of resolution is sent to a member
s.291: Circulation of written resolution proposed by directors:
Applies to written resolution by directors;
s.291(2) must send copy to every eligible member [i.e. any member who would at that date have been entitled to
vote at a GM- see s.289];
s.291(4) resolution must be accompanied by statement informing member: (i) how to signify agreement (s.296);
and (ii) date it must be passed by if it is not to lapse (s.297).
s.296: Procedure for signifying agreement to written resolution:
Member signifies agreement when C receives authenticated doc which: (i) identifies resolution; and (ii) indicates
agreement.
Must be sent in hard copy OR electronic form OR by means of a website.
Once agreed, cannot be revoked.
s.296(4): written resolution passed when required majority of eligible members have signified agreement [i.e.
special resolution passed when members representing not less than 75% of total voting rights of all eligible
members have agreed]
s.297: Period for agreeing to written resolution:
Written resolution lapses if not passed before end of either: (i) the period signified in AoA; or (ii) 28 days
beginning with the circulation date.
Agreement ineffective if signified after expiry of period.
N.B. default time period is 28 days from the circulation date however check AoA as they may specify different time
period as AoA will override the default position here (s.297(1)) ALSO time period is NOT 28 clear days as s.297 is
NOT listed under s.360
s.300: Written resolutions: relationship between this chapter and provisions of company’s articles: AoA
provision is void if seeks to exclude WR procedure
Article provision of C is void if says that resolution cannot be proposed and passed as written resolution.
,General Meetings Notice & Procedure
s.301-Resolutions at general meetings-
Resolution at GM is validly passed if: (i) notice of the meeting AND the resolution is given; AND (ii) the meeting
is held and conducted.
s.302- Directors’ power to call general meetings- Ds responsibility to convene SH general meetings
1. 1st BM:
Ds refer:
(i) matters outside Ds’ powers and need SH resolution [e.g. amending AoA (s.21)]; or
(ii) matters within Ds’ powers but requires prior approval of SH [e.g. loan to D (s.197)].]
Ds:
(i) approve form of notice to SH of GM [contents: s.311 (time,date,location); s.283(6)(special resolution voted on
wording); s.325(1)(statement that SH can appoint proxy)] and [ensure notice time period adhered to in setting date
for GM: s.307(14 days/shorter notice then send evidence of consent?); s.360(1)(clear day rule)];
(ii) authorise its circulation to SH.
2. GM takes place
3. 2nd BM:
Ds implement what SH voted on [e.g. register new AoA at CH (s.30)]
s.307- Notice required of general meetings-
1.Notice of at least 14 days for a private C [default notice] [NB clear days but CAN include weekdays and bank
holidays]
2. For public C: (i) Notice of at least 21 days for AGM; and (ii) Notice of at least 14 days for other general
meetings.
3. AoA may require longer period of notice than specified.
s.307(4)-(6): Short Notice
4. Can be called by shorter notice [e.g. on same day as board meeting] if shorter notice agreed by members;
5. Shorter notice must be agreed by majority in number [N.B. must be majority in number AND together have
90% or above] [N.B. if only a few SH exist then consent to short notice easy to secure] who:
(i) together hold not less than the requisite percentage in nominal value of the shares giving a right to attend and
vote at the meeting; or
(ii) if C doesn’t have share capital: together represent not less than the requisite percentage of the total voting
rights at that meeting of all the members.
6. Requisite percentage is:
(i) for private C, 90% or such higher percentage (not exceeding 95%) as may be specified in the company's
articles;
(ii) for public company, 95%.
*N.B. evidence of consent to short notice & the notice must be sent to all SH before GM takes place
* Need: i) majority in number; and ii) who together have 90% or more*
s.360(1)- Clear day rule applies to s.307(1)- therefore in counting days of notice period, day of meeting and day of
notice both excluded [GM held on day 16] *NB a GM can take place on the weekend/bank holiday as the
provision does NOT state that these are working days*
*N.B. s.1147- Deemed delivery of documents and information:
Default rule- if notice posted/emailed then deemed served 48hrs after posting/sending. [therefore start counting on
1 the day after it is deemed served]
AND In calculating the 48hr period do NOT take into account days that are not working days (see s.1173)
*NB if given by hand then there is no 48hr deemed service period*
s.1173: “working day” means a day that isn’t weekend or bank holiday
s.308: Manner in which notice to be given
Notice for a GM must be given in: a) hard copy; or b) electronic form; or c) by means of a website [or partly by
one and partly by another].
s.310(1): Persons entitled to receive notice of meetings:
Notice of GM must be sent to every SH and every D.
s.311: Contents of notices of meetings:
(i) s.311(1): must state time, date & place of meeting
(ii) s.311(2): must state general nature of business to be dealt with at GM
[ALSO]
(ii) s.283(6)- precise wording of any special resolutions to be voted on; and
,(iii) s.325(1)- statement that any member can appoint a proxy.
s.502: Auditor’s rights in relation to resolutions and meetings:
1. Must send written resolutions to C’s auditor as well as members
2. C’s auditor entitled to: (i) receive all GM notices; (ii) attend any GM; and (iii) to be heard at a GM.
Procedure at General Meetings
1. Quorum
s.318- Quorum at meetings-
1. one member Cs quorum is 1 qualifying person;
2. all other Cs [subject to AoA] quorum is 2 qualifying persons [excludes if both are representatives of same
corporation or proxies of same member]
3. Qualifying person is: (i) individual who is a member; (ii) representative of a corporation; (iii) proxy of a
member.
MA 38: Quorum for GMs:
If no quorum at GM then no other business can be done apart from appointment of chairman of the meeting.
2. Voting
Chairman of GM
MA 39: Chairing General Meetings:
(i) If Ds appointed chairman then he chairs GM
(ii) if Ds not appointed chairman/he’s unwilling 1st order of business is that either: (a) Ds present; or (if no Ds
present) (b) the meeting, appoints a D or SH to chair the GM.
Ordinary Resolutions
s.281(3)- General provisions about resolutions- Resolutions-where CA 2006 provision requires a resolution but
doesn’t specify what kind of resolution required then it requires an ordinary resolution by default unless AoA
require a higher majority.
s.282- Ordinary Resolutions-
1. passed by simple majority [N.B. this is more than 50% and NOT at least 50% i.e you need 51%];
2.Written resolution passed by simple majority if passed by members representing a simple majority of total
voting rights of eligible members [i.e. all SH not just those that have voted] [s. 284: (i) for Cs with a share capital,
1 vote for each share/ each £10 of stock held; (ii) in any other case every member has 1 vote];
3. Resolution passed at meeting on show of hands passed by simple majority of votes cast by those entitled to
vote [s.284: 1 vote for each member present] [regardless of no. of shares held by SH] [N.B. if you are present
and abstain from voting then disregarded for purposes of vote on show of hands or on a poll];
4. Resolution on a poll taken at meeting passed by simple majority of total voting rights of members who vote [s.
284: (i) for Cs with a share capital, 1 vote for each share/ each £10 of stock held; (ii) in any other case every
member has 1 vote];
[**N.B. if you are present and abstain from voting then disregarded for purposes of vote on a poll and
everyone else’s shareholding is proportionately adjusted [someone’s old shareholding % ÷ new shareholding
% (i.e. minus the shareholding of the abstainer) = new proportionate shareholding %]]
5. Anything that may be done by ordinary resolution may also be done by special resolution.
Special Resolutions
s.283- Special Resolutions-
1. need a majority of not less than 75%;
2. Written resolution needs to be passed by:
(i) members representing not less than 75% of the total voting rights of eligible members [s. 284: (i) for Cs with
a share capital, 1 vote for each share/ each £10 of stock held; (ii) in any other case every member has 1 vote];
AND
(ii) must state it was proposed as a special resolution; AND
(iii) must state that it may only be passed as a special resolution.
3. Resolution passed at meeting on show of hands needs:
(i) a majority of not less than 75% of votes cast by those entitled to vote [s.284: 1 vote for each member present
[regardless of no. of shares held by SH]]; AND
, (ii) notice of meeting must include the text of the resolution and specify the intention to propose the resolution as a
special resolution; AND
(iii) state that the resolution may only be passed as a special resolution.
[**N.B. if you are present and abstain from voting then disregarded for purposes of vote on show of hands
or on a poll]
4. Resolution passed on poll taken at meeting needs:
(i) a majority of not less than 75% of total voting rights of members who vote [s. 284: (i) for Cs with a share
capital, 1 vote for each share/ each £10 of stock held; (ii) in any other case every member has 1 vote]; AND
(ii) notice of meeting must include the text of the resolution and specify the intention to propose the resolution as a
special resolution; AND
(iii) state that the resolution may only be passed as a special resolution.
[**N.B. if you are present and abstain from voting then disregarded for purposes of vote on a poll and
everyone else’s shareholding is proportionately adjusted [someone’s old shareholding % ÷ new shareholding
% (i.e. minus the shareholding of the abstainer) = new proportionate shareholding %]]
Votes: General Rules [WR/hands/poll]
MA 42- Voting: General- resolution put to vote at GM must be decided on show of hands unless poll is demanded
s.284- Votes: General Rules-
1. Written resolution: (i) for Cs with a share capital, 1 vote for each share/ each £10 of stock held; (ii) in any
other case every member has 1 vote;
2. Show of hands at meeting: 1 vote for each member present [regardless of no. of shares held by SH];
3. On a poll taken at a meeting: (i) for Cs with a share capital, 1 vote for each share/ each £10 of stock held; (ii)
in any other case every member has 1 vote.
4. BUT voting provisions above can be changed in AoA.
**N.B. if you are present and abstain from voting then disregarded for purposes of vote on show of hands
or on a poll
Show of Hands
s.320- Declaration by chairman on show of hands
After vote on resolution by show of hands a:
a) declaration by chairman that: (i) resolution has/has not passed; or (ii) passed with a particular majority is
conclusive evidence of that fact without proof of the no./proportion of votes; and
b) entry in the minutes of the chairman’s declaration is also conclusive evidence of that fact without proof of the
no./proportion of votes.
Poll Vote
s.321- Right to demand a poll vote-
1. an AoA void if excludes right to demand poll vote on any question (other than for election of chairman of
meeting or adjournment of meeting);
2. an AoA void if makes ineffective a demand for a poll on any question made by:
(i) not less than 5 members; or
(ii) member(s) having 10% of total voting rights of all the members; or
(iii) member(s) holding shares on which aggregate sum has been paid up equal to not less than 10% of total sum
paid up on all the shares.
MA 42- Voting: General- resolution put to vote at GM must be decided on show of hands unless poll is demanded
MA 44- Right to demand a poll vote-
1. Can demand poll vote:
(i) in advance of GM; or (ii)at GM before show of hands OR immediately after show of hands result.
2. Poll may be demanded by:
(i) chairman; (ii) the Ds; (iii) 2/more SH; (iv) SH(s) with not less than 10% of total voting rights of all SHs having
right to vote.
Corporate Representatives & Proxies at GM
s.323- Representation of Corporations at Meetings:
If another Corporation is a member of C, then its’ Ds can authorize a person to act as its representative at any C
meeting.
Authorised persons entitled to exercise same powers as the Corporation could exercise if it was an individual
member of the C.
s.324- Right to appoint Proxies:
(i) Member can appoint another as proxy to exercise all his rights, attend, speak & vote at GM.
(ii) Member can appoint more than one proxy for meeting BUT each proxy must be appointed to exercise rights
attached to different shares held by him [e.g. a different £10 of stock held by him]
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