1. Learning Objectives To learn the types of meetings and the types of resolution. These all are protections to members and stake-holders from the controlling of the company by the directors. Chapter 8 Company meetings

2. Topic list 1. The importance of company meetings 2. Types of general meeting 3. Calling a meeting 4. Types of resolution 5. Single member private companies

4. Exam guide For the exam you must be quite clear about the different types of resolution, when each type is used, and the percentage vote needed for each type to be passed. This topic lends itself to knowledge questions. However, resolutions in particular are important in many areas of the corporate part of the syllabus and meetings of members are an important control on the acts of the directors, so this topic could easily be incorporated into an application question.

5. 1. Introduction (1)All companies will have both directors and members (in some companies these will be the same person(s)). (2)The function of directors is to manage the company – their exact powers will be contained in the Articles. As a general rule directors act collectively through the board. Directors make day to day management decisions at board meetings. (3)Statute specifies a number of situations when the members’ approval must be obtained. This is done by passing resolutions at GMs. The procedure is governed by the Articles. Media: 美菱电器召开股东大会 罢免顾雏军董事长职务 Media: 美菱电器召开股东大会 罢免顾雏军董事长职务

6. 2. Practice: Meetings In relation to company law explain and distinguish between the following: (18 mins) (a) Annual general meeting; (5 marks) (b) Extraordinary general meeting; (2 marks) (c) Class meeting. (3 marks) (Total=10 marks) Answer:

7. (1) The importance of company meetings (a) In theory, the ultimate control over a company’s business lies with the members in a general meeting. 美菱电器召开股东大会 罢免顾雏军董事长职务

8. (b) A meeting involved more than one person; Sharp v Dawes (1876) in which a meeting between a lone member and the company secretary was held not to be validly constituted.

9. (c) It is possible, however, for a meeting of only one person to take place in the following circumstances: (i) In the case of a meeting of a particular class of shareholders and all the shares of that class are owned by the one member. (ii) By virtue of s.371 of the Companies Act 1985 (CA) the court may order the holding of a general meeting at which the quorum is to be one member.

10. (2) The types of GM (a) Annual general meeting (i) Every company is required to hold an AGM every calendar year. (ii) The maximum period is 15 months, but the first AGM may be held in 18 month after incorporation. (iii) the statutory meeting: ① If a company fails to hold an AGM then any member may apply to the Secretary of State to call a meeting in default (CA 85 s.367). ② Aims to avoid the circumstance that the members refuse to attend the GM and the inadequacy of the quorum which lead to the GM can’t be convened.

11. (iv) The business conducted at AGMs tends to be routine such as the re-election of directors, consideration of accounts and approval of dividends. (v) Special provision relating to private company In line with the recognised distinction between public and private companies the Companies Act of 1989 introduced a provision, in the form of a new CA s.366A, which permitted private companies, subject to approval by a unanimous vote, to dispense with the holding of AGMs. Under s.381 A of the Companies Act 1985 it is no longer necessary for a private company to convene a GM where the members have unanimously signed a written resolution setting out a particular course of action.

12. AGM

13. (b) EGM An EGM is any meeting other than an AGM. EGMs are usually called by the directors, although members holding 10% of the voting shares may requisition such a meeting by virtue of s.368 (CA 1985).

14. EGM

15. (c) Class meeting (i) This refers to the meeting of a particular class of shareholder; (ii) Where it is proposed to alter the rights attached to particular shares then it is necessary to acquire the approval of the holders of those particular shares to any such alteration. In order to achieve this approval, a meeting of those holding such shares has to be called to seek their approval of any proposed alteration (CA s.125-127)

16. Conclusion Meetings may be convened in a number of ways by various people: (i) by the directors of the company under Article 37of Table A. Under s.142 CA 1985, to call meetings where there has been a serious loss of capital, defined as the assets falling to half or less than the nominal value of the called up share capital. (ii) by the members using the power to requisition a meeting under s.368CA1985.

17. (iii) by the auditor of a company under s.392A, which provides for a resigning auditor to require the directors to convene a meeting in order to explain the reason for the auditor’s resignation. (iv) the Secretary of State may under s.367, on the application of any member, call a meeting of a company where it has failed to hold an Annual General Meeting as required under s.366. (v) the court may order a meeting under s.371 where it is impracticable otherwise to call a meeting.

18. 3. Practice: Resolutions Explain what is meant by: (a) Extraordinary resolutions (2 marks) (b) Special resolutions (2 marks) (c) Elective resolutions (3 marks) (d) Written resolutions (3 marks) (Total=10 marks) Answer:

19. (a) Extraordinary resolutions (i) It is the resolution carried by a majority of 75 % or more of votes cast. (ii) Notice: A 14 days’ notice period applies. (iii) Condition: ① where the company is to be put into creditors’ voluntary liquidation (where it may be advantageous to have the 14 day notice period rather than the 21days required for a special resolution); ② where there is to be variation of class rights.

20. (b) Special resolutions (i) It requires a majority of 75 % or more to pass it (ii) Notice: 21 days (iii) Condition: it will be required for a change of name, reduction of share capital, alteration of the objects or articles, a voluntary winding up (in most cases) and for the presentation of a petition by the company for a compulsory winding up.

21. ( ★ ) A signed copy of all special and extraordinary resolutions must be delivered to the Registrar of Companies for filing, usually within 15 days of their being passed. Also the text of special and extraordinary resolutions must be set out in full in the notice convening the meeting and they must be described as such.

22. (c) Elective resolutions (i) It is one which may be passed only by a private company in particular circumstances. ① The conferring of authority to issue shares indefinitely or for a fixed period which may exceeds years (s80A ) ② The dispensing with the laying of accounts before a GM, unless required by a member or the auditors (s252) ③ The dispensing with the annual appointment of auditors (s386 )

23. ④ The dispensing with the need to hold an AGM unless required by a member (s366A), and ⑤ The reduction to 90 % or more of the minority required to consent to short notice under s369 (4) or s378 (3). (ii) All members who are entitled to attend meetings and vote must agree to the passing of an elective resolution, in person or by proxy. (iii) Notice: 21 days notice must be given (iv) The resolution must be registered within 15 days (s 379) An elective resolution can be revoked by ordinary resolution, which must also be registered (s 379, 380)

24. (d) Written resolutions (i) It is the resolution signed by all members entitled to attendant and vote and can be any resolution which could ordinarily be passed in GM. (ii) Effect: ① shall be 'equivalent' to resolutions passed in GM ② enable the private company to carry on business without the need to call meetings (iii) Other point: ① It can be used not withstanding any provision in the company's articles.

25. ② It cannot be used to remove a director or auditor from office under s303 or s391 respectively, since both have a right to attend and speak at a meeting where any proposal for removal is to be discussed. ③ A Copy of any proposed written resolution or details thereof must be sent in advance to the company’s auditors at or before the time notice is sent to shareholders. ④ A written resolution need not be contained in a single document so long as all documents signed set out the resolution.

26. (iv) Failure to comply with this requirement renders the company liable to a fine but the validity of the resolution is not affected. (v) The date of a written resolution is the date of the last member’s signature and the company is requested to keep a record of all written resolutions.

27. Appendix: Resolutions of limited company TypesNotice Ordinary resolutions Simple majority14 Extraordinary resolutions 75% vote in favour14 Special resolutions 75% vote in favour21 Elective resolutions Unanimous in private company at meeting or in writing to dispense with certain formality Written resolutions Unanimous in private company and in writing

28. Appendix: Requisitioning a resolution The directors normally have the right to decide what resolutions shall be included in the notice of a meeting. However, apart from the requisition of an EGM, members can also take the initiative to requisition certain resolutions.

29. Requisitioning a resolution

30. 4. Calling a meeting Sundry NoticeVotingQuorumProxies Chairman Minutes

31. (1) Notice (a) Content of notice: The notice convening the meeting must give certain details : date, time and place of the meeting; identification of AGM, special and extraordinary resolution; sufficient information about business to be discussed at the meeting to enables shareholders to know what is to be done.

32. (b) Routine business : Declaration of dividends (if any); Election of directors; Appointment of auditors and fixing of their remuneration. (c) Special business: (i) It is necessary to set out in the notice convening the meeting the full verbatim text of the relevant resolution. (ii) it is defined by s378 Companies Act 1985. It is 28 day’s notice of a resolution given to the company by a member.

33. (iii) It is need in 3 situations: ① the removal of a director under s303 ② the appointment and re- appointment a director aged 70 or above under s293 ③ the removal of an auditor under s391 Q: How can members remove a director from office? What is the significance of special notice in context? When is a company compelled to call an extraordinary general meeting?

34. Types of Meeting NoticePurpose AGM21 clear days Routine business eg. Appointment of auditors; retirement and reappointment of directors EGM14 clear days Issues arising from the ongoing life of the company Directors call meetings and set the agenda. They must call an ‘AGM’ every year, but they can call an ‘EGM' whenever the need arises.

35. (2) Voting (a) Style: One vote per member: is normal but some shares may carry no voting rights in normal circumstances. The rights of members to vote and the number of votes to which they are entitled in respect of their shares are fixed by the articles.

36. (b) Form: show hands or poll (i) show hands: each member present; the proxies not voting unless the articles so provide (ii) poll: a method of voting at company meetings which allows a member to use as many votes as his share holding grants him On a poll every member and also proxies representing absent members may cast the full number of votes to which they are entitled. A poll need not be held at the time but may be postponed so that arrangements to hold it can be made.

37. A poll may be demanded by:  ≥five members ( unless the articles permit a lesser figure)  Member (s) representing ≥ 1/10 of the total voting rights  Member (s) holding shares which represent≥ 1/10 of the paid-up capital (iii) A decision on a poll will override a decision on a show of hand.

38. (c) Result of a vote In voting, either by show of hands or on a poll, the number of votes cast determines the result. Votes which are not cast, whether the member who does not use them is present or absent, are simply disregarded. Hence the majority vote maybe much less than half (or three quarters) of the total votes which could be cast.

39. (3) Proxies (a) Definition: 'A written instrument authorising another person to vote on behalf of an absent shareholder'. The term is also applied to the person appointed. (b) In a private company a proxy may attend, vote and speak. In a public company he may not speak. (c) A proxy can only vote on a poll unless articles otherwise provide.

40. (d)Directors can issue proxy forms. In public companies the forms must be two ‑ way. (i.e. specify 'for'/'against') (e)Members may attend and vote in person thereby overruling their proxy's vote. (f)If a company is a shareholder its representatives are known as 'company representatives' and not proxies. (g)Proxies can vote as they like unless: (i)they have received instructions and been remunerated. (ii)there is a fiduciary duty involved (eg, the proxy is the member's adviser). (iii) they are directors, in which case they must act in the best interests of the company (unimpotant)

41. (4) Quorum (a) Definition: The minimum number of persons suitably qualified who must be present at a meeting before it can validly transact business. (b) Table A says two members (or their proxies) constitute a quorum. (c) If no quorum is present then the outcome depends upon who convened the meeting: (i) If directors convened the rule is "same time next week". (ii) If members convened it is cancelled. (d) If all members entitled to attend and vote sign a resolution it is deemed to be passed even if there is not a meeting.

42. (5) Minutes (a) Must be kept of all meetings of managers and directors and of general meetings. (b) Must be available for inspection by the members without charge. (GMs only) (c) Are evidence of proceedings if signed by the Chairman ss.382 ‑ 383.

43. (6) Chairman (a) The chairman of the board of directors is to preside at GMs: in his absence another director chosen by the directors shall preside instead. (b) In the last resort a member chosen by the members present can preside. (c) The chairman derives his authority from the articles and he has no casting vote unless the articles give him one.

44. (d) His duties are to maintain order and to deal with the agenda in a methodical way so that the business of the meeting may be properly transacted. The chairman ：  May dissolve or adjourn the meeting if it has become disorderly or if the members present agree.  Must adjourn if the meeting instructs him to do so.

45. Calling a meeting