COMPANY MEETING

There are three types of meeting: (i) AGM (Annual General Meeting) The annual general meeting. By virtue of s.366 of CA 1985, every company is required to hold an annual general meeting (AGM) every calendar year; subject to a maximum period of 15 months. This means that if a company held its AGM on 1 January 2000, then it must hold its next AGM by 31 March 2001 at the latest. 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 s.367). The business conducted at AGMs tends to be routine such as the reelection of directors, consideration of accounts and approval of dividends. 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.366 A, which permitted private companies, subject to approval by a unanimous vote, to dispense with the holding of annual general meetings. Under s.381 A of the Companies Act 1985 it is no longer necessary for a private company to convene a general meeting where the members have unanimously signed a written resolution setting out a particular course of action. Most companies must hold an AGM. (i) CA 1985 s.366 provides that an AGM must be held every calendar year with not more than 15 months between meetings. A newly incorporated company must hold its first AGM within 18 months of incorporation. (ii) CA 1985 s.367 - if a company does not hold an AGM as required, any member can apply to the Secretary of State to call or to direct the calling of the meeting. (iii) CA 1985 s.366A - members of a private company can choose to dispense with the holding of an AGM by elective resolution - but any member of such a company can require that an AGM be held in a particular year by giving notice at least 3 months before the end of the year. (iv) CA 1985 s.371 - if it is impracticable to call a meeting or conduct a meeting in the manner prescribed by the companys articles, any member or director who would be entitled to vote can apply to the court which can order the meeting to be called or held. (b) Usual Business of an AGM (i) Directors lay before the company annual accounts and reports for t the most recent financial period. (ii) Auditor's term of office ends at AGM, so they must be re-appointed or new auditors must be appointed. (iii) Director's recommendation for the dividend to be paid to shareholders will be voted on. (iv) The Articles may provide that directors are to retire in rotation. Some directors will retire at the AGM and must be re-appointed or replaced. (v) Resolutions may be required to pay directors and auditors fees. (Now normally fixed by contract).

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(vi) Shareholders may have their own resolutions placed on the agenda.

(ii) the extraordinary general meeting. An extraordinary general meeting (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). Table A provides that only directors can call an EGM, unless there are too few directors in the UK to make up a quorum - then any member can call one. CA 1985, s.368 - directors must call an EGM if requisitioned by holders of 10% of the paid up capital of the company. CA 1985, s.371 - power of the court to order the holding of an AGM also applies to EGMs. CA 1985, s.142 - public company must hold an EGM if the companys net assets have fallen to less than half of its called up capital. Meeting must be called within 28 days of the directors becoming aware of the loss of capital, and must be held within 56 days of that date. CA 1985, s.392A - where auditor has resigned and has made a statement of circumstances he thinks should be brought to the attention of creditors and shareholders - the auditor can requisition the directors to hold an EGM so that he can explain the circumstances of his resignation.

(iii) the class meeting. If a company has more than one class of share (e.g. preference and ordinary shares), it may be necessary to call a meeting of the holders of one class of shares to approve a proposed variation of the rights attached to their shares. This is known as a class meeting. This refers to the meeting of a particular class of shareholder; i.e. those who hold a type of share providing particular rights, such as preference shares. 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 ss.125 127). Meetings may be convened in a number of ways by various people / Persons who can convene a meeting (i) Directors Apart from this usual power, directors of public limited companies are required, under s.142 of the 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) The members The members of the company may call a general meeting using the power to requisition such a meeting under s.368 of the CA 1985. To require the convening of a company meeting any shareholders must hold at least one-tenth of the share capital carrying voting rights. If the directors fail to convene a meeting as required within 21 days of the deposit of the requisition, although the actual date of the meeting may be within eight weeks of the date of requisition, then the requisitionists may themselves convene a meeting and recover any expenses from the company.

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(iii) An auditor An auditor of a company who intends resigning from his position may require the directors to convene a general meeting of the members under s.392A of the Companies Act 1985. This power is provided so that, where there is cause for concern, the auditor can explain the reason for his resignation to the members generally and put them on notice. (iv) The Secretary of State 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 AGM as required under s.366 (see part (i)above). (v) The court The court may order a meeting under s.371 where it is impracticable otherwise to call a meeting. The courts power under s.371 is extremely wide and any such meeting is to be called, held and conducted in any manner the court thinks fit. In Re El Sombrero Ltd (1958) the applicant under s.371 held 900 of the companys 1000 shares although he was not a director of the company. The only two directors held 50 shares each. When the majority shareholder sought to exercise his power to remove the two existing directors under s.303 of the Companies Act 1985, they refused to call an annual general meeting and made it clear that they would not attend any meeting called in line with the requirements of s.368. 3. Conduct of Meetings (a) Quorum "Quorum" = the minimum number of persons who must be present before the meeting will be valid. The quorum required for board meetings is generally fixed by the Articles. Model Article 11 (public company Model Article 10) provides that the quorum may be fixed by the directors and, unless so fixed, shall be two; it allows alternate directors to be counted. The quorum must be disinterested, i.e. it must comprise directors who are entitled to vote on a particular matter before the meeting. A quorum must be present for each item of business, but if a director has an interest in a contract, he will not be permitted by the Articles to vote on it and may not be counted for the purposes of the quorum for that item of business.

Articles can provide for any quorum. Table A requires two members entitled to vote, or their proxies. If Table A has been excluded without providing an alternative, CA 1985 s.370 requires two members personally present. Single Member Private Companies - one member will form a quorum, notwithstanding anything in the articles. A meeting held without a quorum cannot validly transact any business: (b) Minutes Companies must keep minutes of general meetings at the registered office for inspection by members. Chairman signs the minutes - they then become prima facie evidence of what occurred at the meeting. (c) Voting and Proxies

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CA 1985 s.372 - all companies must allow a member who cannot attend a meeting to allow a proxy to vote in his place. Appointment of proxy must be in writing and lodged with company at least 48 hours before meeting. There are two methods of voting at company meetings: (i) Show of Hands Voting can be by show of hands unless articles provide otherwise. Each member has just one vote regardless of number of shares he has - hands are counted and the result declared by the chairman. Result is conclusive once recorded in the minutes. Proxies cannot vote on a show of hands unless the Articles allow this. (ii) Voting by Poll A company cannot refuse a demand for a poll made by: at least 5 members having the right to vote, or any member/members representing one-tenth or more of the total voting rights. On a poll, every member, or their proxy, has one vote for each share. In accordance with the Model Articles (for a plc), a poll may be demanded by: (i) (ii) (iii) (iv) The chairman of the meeting or the directors. At least two persons with the right to vote at the meeting. A person, or persons, representing no less than 10% of the total voting rights of all the members with the right to vote at the meeting. A member, or members, representing no less than 10% of the paid-up share capital.

A poll is usually called if a motion sponsored by the directors is lost or the sense of the meeting is indeterminate. This is because it is the chairmans duty to ascertain the true sense of the meeting by demanding a poll. The chairman must also do so if the proxy votes received indicate that a different result would be obtained to the vote on a show of hands, if a poll were held. Given the expectation that shareholders attending the AGM may vote against some of the resolutions, a poll vote may be required for the above reasons. Public company Model Article 36 allows that most polls may be taken within 30 days of a demand. In respect of public companies, quite often a poll is held at the conclusion of the meeting as this allows the rest of the proceedings to be transacted without delay. Holding the poll at the end of the meeting also allows a poll to be conducted at the same time as any other resolutions coming before the meeting. Polls may be conducted by using voting lists (sheets of paper placed on a table allowing shareholders and proxies to go to the table to vote), ballot papers (individual papers distributed to voters) or electronic voting Members normally have one vote per share in a poll. Members are entitled to exercise their votes according to their own interests. Calling a meeting An AGM requires 21 days written notice An EGM requires 14 days written notice. The business of an AGM need only be specified in the notice in general terms. Special notice is a notice that a member intends to move a resolution at a meeting. Special notice is required to: (a) remove a director from office. Page 4 of 7

(b) Elect a director aged 70 plus to office in a public company. (c) Remove an auditor. Three types of resolutions can be passed by both Public and private company which are: (i) Ordinary resolution simple majority, minimum 14 days notice (ii) Special resolution 75% majority, minimum 21 days notice (iii) Extraordinary resolution 75% majority, minimum 14 days notice Minutes must be kept, usually signed and must be open to inspection by members.

RESOLUTION
The types of resolutions that can be passed by companies The business of the meeting is conducted by the putting of, voting on and passing or not of resolutions. For the business to be properly conducted each resolution must be properly put, any amendment properly put, discussed and voted on and the resolution (as amended if this is the case) properly discussed and voted on. It is therefore necessary to know: the types of resolution and requirements for each to be properly put to the meeting moving and discussion of resolutions amendments voting Resolutions are the way in which companies take decisions in general meetings. Whereas an ordinary resolution requires a simple majority of those voting to approve the motion, both extraordinary and special resolutions require that three quarters of those voting should approve of the proposal. (i) Extraordinary resolutions

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Section 378 (1) of the Companies Act 1985 provides that an extraordinary resolution is one passed by a three-quarters majority of votes cast at a meeting convened by a notice specifying the intention to propose such a resolution. As no period of notice is stated in s.378 it would appear that, unless the articles provide for a longer period, the minimum period of notice will be the 14 days ordinarily laid down for extraordinary general meetings, or 21 days for annual general meetings, under s.369 CA 1985. The effect of linking the notice of the resolution to the notice for the meeting is that the minimum 14 day period of notice can be reduced with the approval of the appropriate majority, i.e. those representing at least 95% of the authorised capital of the company (s. 369(4) CA 1985). This latter majority may be reduced by the passing of an elective resolution to that effect in a private company. The requirement for meetings to pass extraordinary resolutions is not a common one. However, s.125 of the Companies Act 1985 provides for the variation of class rights, other than those contained in the Memorandum, by an extraordinary resolution of the class concerned where the articles of association do not provide for variation. Also, although it is normally necessary for the company to pass a special resolution in order to be wound up voluntarily, an extraordinary resolution can be used on the grounds of insolvency (Insolvency Act 1986, s.84). (ii) Special resolutions A special resolution is one that has been passed by a majority of not less than three-quarters at a general meeting of which not less than 21 days notice has been given, such notice having specified the intention to propose the resolution as a special resolution (s.378(2)CA 1985). The 21 day notice period may be shortened as with extraordinary resolutions under s.368 CA 1985. The companies legislation requires special resolutions to be passed in too many situations to list them all. Amongst those in the Companies Act 1985 are the following examples: (i) Alteration to objects clause (s.4) (ii) Alteration of articles (s.9) (iii) Change of company name (s.28) (iv) Re-registration of a private company as a public company (s.430 and vice versa s.53) (v) Reduction of capital (s.135).

(iii) Elective resolutions Under s.379A CA 1985 a private company may dispense with certain procedural requirements of the Companies Act 1985 by passing an elective resolution to that effect. Five possibilities are set out in s. 379A, but the Secretary of State can alter the list by statutory instrument (s.117 CA 1989). An elective resolution may be passed: (i) to provide directors with permanent authority to allot shares (s.80A CA 1985); (ii) to dispense with laying accounts and repor ts before the general meeting (s.252 CA 1985); (iii) to dispense with the holding of annual general meetings (s.366A CA 1985); (iv) to reduce the majority required to consent to short notice of a meeting (s.369 CA 1985); (v) to dispense with the appointment of auditors annually (s.386 CA 1985). An elective resolution requires 21 days notice to be given of the meeting at which it is to be proposed. It also requires unanimity of all members entitled to attend and vote. The members may agree unanimously to dispense with the notice requirement. An elective resolution may be revoked by an ordinary resolution. Finally it should be noted that an elective resolution may be passed by written resolution. Page 6 of 7

(iv) Written resolutions Although the day-to-day business of the company is conducted under the control of the company directors who are the agents of the company, some decisions can only be taken by the shareholders passing an appropriate resolution at a general meeting of the company. An example would be the declaration of dividends. However, Article 53 of the Model Articles of Association states that a written resolution signed by all the members entitled to vote will be as valid as a resolution passed in the normal way at a meeting of the shareholders and thus obviates the need to call a meeting. It is apparent that the requirement for unanimity effectively restricts the provision to private companies with their smaller memberships. This relaxation of the need to call a formal meeting was extended by the Companies Act 1989. By virtue of s.381A CA 1985, anything which in the case of a private company might be done by resolution in a general, or class meeting, may be done by resolution in writing signed by, or on behalf of, all members who would be entitled to attend and vote at such meeting. However, resolutions for the removal of directors or auditors before expiry of their term of office cannot be the subject of written resolutions. The effect of s.381A is that private companies no longer have to call meetings or give notice for resolutions. The written resolution requires unanimity. The members, however, can sign different pieces of paper so long as each accurately states the terms of the resolution (s.381A(2)). Directors or the secretary must ensure that the companys auditor receives a copy of the resolution before the members receive it, but although failure to comply with this provision may render the person liable to a fine, it does not affect the validity of the resolution. The date of a written resolution is the date when the last member signs it (s. 381B(3) CA 1985) and the company is required to keep a record of any written resolutions.

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