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CLS cc
Company Law Summary
COMPANY LAW SUMMARY:
MEETINGS
Notice of meetings: S62:
1. Must be in writing.
2. Include the date, time and place of the meeting.
3. Where the company set a record date for a meeting
4. The notice should explain the general purpose of the meeting
5. In a public company and a non-profit company that has voting members,
notice of a shareholder meeting should be given 15 business days before
the date of the meeting. In any other company the notice, convening the
meeting must be sent ten business days before the date of the meeting.
The provisions of the memorandum of Incorporation may prescribe
longer minimum notice.
6. A copy of any proposed resolution received by the company, which is to be
considered at the meeting, must accompany the notice convening the
meeting.
7. The notice must indicate the percentage of voting rights required for
the resolution to be adopted.
8. A notice convening the AGM of a company must contain a summary of
the financial statements that will be tabled at the meeting.
9. A notice convening a meeting must contain a statement that a
shareholder is entitled to appoint a proxy
10. The notice should indicate that meeting participants will be required to
provide satisfactory proof of identity at the meeting. Where the company
has failed to give proper notice of the meeting or there has been a defect
in the giving of the notice, the meeting may proceed if the persons who
are entitled to vote in respect of each item on the agenda are present at
the meeting and acknowledge actual receipt of the notice and agree to
waive notice of the meeting or in the case of a material defect, ratify the
defective notice.
The term shareholder is used in respect of profit companies.The term member
is used in respect of non profit companies.
PROXY:
A proxy is a person appointed to represent a shareholder at a meeting.
At common law: there was no right to appoint a person, speak and
vote on behalf of another.
The companies Act allow a shareholder to appoint two or more
proxies.
Once appointed, a proxy will be allowed to attend, participate in, speak and
vote at the shareholders’ meeting.
Ingre v Maxwell the court held that there must be at least two persons present
to constitute a valid meeting where one person is in attendance and holds the
proxies of all other persons who were entitled to attend the meeting.
The appointment of a proxy must be in writing and signed by the
shareholder appointing the proxy.
The appointment remains valid for one year after it was signed.
A proxy may delegate authority to act on behalf of the shareholder to
another person.
Critical Law Studies CC ©
, A copy of the proxy appointment form must be delivered to the company
prior to the proxy exercising any rights of the shareholder at the
shareholders meeting.
The shareholder who appoints the proxy has the right to revoke the proxies’
appointment at any time by cancelling it in writing, or making a later
inconsistent appointment of a proxy and delivering a copy of the
revocation instrument to the proxy and the company.
Demand to convene a shareholders’ meeting
The board or any other person specified in the company’s Memorandum, may
call a shareholders’ meeting at any time
A meeting of shareholders must be convened if one or more written and signed
demands for such a meeting are delivered to the company:
1. A demand must specify the purpose of the meeting.
2. Must be signed by the holders of at least 10% of the voting rights
3. The memorandum of Incorporation of a company may specify a lower
percentage than 10%.
4. A company, or any shareholder of the company, may apply to a court for
an order setting aside a demand for a meeting on the grounds that the
demand is frivolous, or because it calls for a meeting for not other purpose
than to re-consider a matter that has already been decided by the
shareholders, or is vexatious.
5. A shareholder who submitted a demand for a meeting may withdraw the
demand before the start of the meeting.
Shareholders acting other than at a meeting
Act without holding a meeting
B4: don’t need to hold an AGM if all the members entitled to attend consent in
writing
Common law: unanimous assent:
Some decisions are valid without having a meeting if all the members know of
the facts and have assented to it
Gohlke: shareholders appointed a director without a formal meeting if they
have unanimous assent
In re Deuomatic: approval of directors salary by the 2 directors who had majority
of the voting rights in the co could be done by unanimous assent
1973 Act: all members entitled to attend the meeting must consent in writing
for a resolution to be passed without a formal meeting. Such decision is made
as if a formal meeting was held
2008 Act: resolutions can be adopted in writing without a formal meeting – if
its done by the required majority – it will be as if the meeting was held.
BUT AGM cant be conducted in this way
The rights must be exercised within 20 days of getting notice and members must
return a written vote. Within 10 days of the adoption of the resolution
= the company must deliver the results.
,RECORD DATE
The term "record date" is defined in section 1 of the 2008 Act as the "date
established under section 59 on which a company determines the identity of its
shareholders and their shareholdings for the purposes of this Act".
The 2008 Act introduces new provisions enabling the board to set one or more
appropriate record dates for determining which shareholders should:
◦ receive notice of a shareholders meeting,
◦ participate in and vote at a shareholders meeting,
◦ decide a matter by written consent
◦ exercise pre-emptive rights,
◦ receive a distribution, or
◦ be allotted or exercise other rights.
The record date may not be earlier than the date on which the board sets the
record date, nor more than 10 business days before the date on which the
event or action for which the record date is being set, is planned. The method
for calculating the number of business days is set out in section 5(3) of the
2008 Act.
Where the board has set a record date, shareholders must be notified of the record
date as prescribed in the 2008 Act
If the board does not determine a record date, then the record date for convening
a meeting, is:
o the latest date by which the company is required to give shareholders
notice of that meeting
o or in the case of another event or action, the date of the event or
action,unless the company's Memorandum of Incorporation ("MOI") or
Rules provide otherwise.
Annual General Meetings (AGM)
The first AGM of a public company must occur no more than 18 months after
the date of incorporation of the company.
The subsequent AGM must occur within 15 months of the previous AGM. The
following matters must be discussed at every AGM:
Director’s report, financial statements
The audit committee report.
Election of directors.
Appointment of the Auditor and the audit committee.
Any matters raised by the shareholders
Convening a meeting in special circumstances
Where the company cannot convene a meeting because it has no
directors, or because all of its directors are incapacitated, any other
person authorised by the company’s Memorandum of Incorporation
may convene the meeting.
If no other person is authorised = any shareholder may request the
Companies Tribunal to issue an administrative order for a shareholders
meeting to be convened.
a shareholder may apply to a court for an order requiring the meeting
, Quorum
S64: A shareholders meeting may not begin until sufficient people are present,
in aggregate, exercise at least 25% of the voting rights that are entitled to be
exercised in respect of at least one matter to be decided.
A company’s Memorandum of incorporation may specify a lower or higher
percentage than the 25%.
If a company has more than two shareholders and only two are present, a
meeting may not begin until at least three shareholders are present.
Conduct of meetings
Show of hands: any person present and entitled to exercise voting rights must
have only one vote, irrespective of the number of shares held by that person.
Poll: any member including his or her proxy must be entitled to exercise all their
voting rights attached to the shares held by him.
A company may provide for a shareholders’ meeting to be conducted entirely by
electronic communication or allow one or more shareholders or proxies, to
participate by electronic communication in all or part of a shareholders’ meeting
that is being held by that person.
Resolutions
Ordinary resolution: decision with the support of more than 50% of the vote.
The Memo may require a higher percentage on certain decisions.
The act provides there must be at least a margin, at all times, of at least 10%
between the requirements for adoption of an ordinary or special resolution.
Special resolution:
Requires 75% of the voting rights exercised
Memo can provide for a lower %
There must be a margin of at least 10 percentage points between the
requirements for a special resolution and an ordinary resolution
Decisions that require a special resolution
A special resolution is required when taking the following decisions:
Amendment of the company’s Memorandum of Incorporation
Approving a voluntary winding up of the company; and
Approval of a sale of assets, a merger, an amalgamation or a scheme
of arrangement.
Postponement and adjourning of meetings
A meeting may be postponed or adjourned for a week under the following
conditions:
Within one hour after the appointed time for a meeting to begin, a
quorum is not present;
When a quorum is not present at an adjourned or postponed meeting,
the members of the company present in person or by proxy will all be
deemed to constitute a quorum; and
If there is other business on the agenda of the meeting, consideration of
that matter may be postponed to a later time in the meeting without
motion or vote.
