Section 105 of the Companies Act 1997 applies Schedule 2 to proceedings at shareholders’ meetings, except so far as the constitution provides for matters the Schedule expresses to be subject to it.
Clause 2 — notice of meetings
(1) Written notice of the time and place shall be sent to every shareholder entitled to receive notice, every director and an auditor, not less than 14 days before the meeting.
(2) The notice shall state (a) the nature of the business in sufficient detail to enable a shareholder to form a reasoned judgment in relation to it; and (b) the text of any special resolution to be submitted.
(3) An irregularity is waived where all shareholders entitled to attend and vote attend without protest, or all agree to the waiver.
(4) Subject to the constitution, accidental omission to give notice, or failure to receive it, does not invalidate the proceedings.
(5) Subject to the constitution, where a meeting is adjourned for less than one month, no fresh notice is needed beyond the announcement at the meeting adjourned.
This is the provision most often breached. A notice saying “to consider a major transaction” without describing it does not comply. For a special resolution the exact text must be set out, because the resolution passed must be the resolution notified.
Clauses 3 and 4 — method and quorum
(a) by shareholders constituting a quorum being assembled together at the appointed place, date and time; or
(b) subject to the constitution, by means of audio, or audio and visual communication by which all participating shareholders constituting a quorum can simultaneously hear each other throughout.
(2) Subject to the constitution, a quorum is present if shareholders or their proxies are present who between them can exercise a majority of the votes to be cast on the business.
(3) Where no quorum within 30 minutes — (a) a meeting called on a shareholder requisition is dissolved; (b) any other meeting is adjourned to the same day in the following week, or to such other date as the directors appoint — and at the adjourned meeting, if still no quorum within 30 minutes, those present are a quorum.
A meeting the shareholders forced the board to call is dissolved if they do not turn up, rather than adjourned. The requisitioning shareholders must attend the meeting they demanded.
Clause 5 — voting
(1) At a meeting held in person, unless a poll is demanded, voting is by voice or by show of hands, as the Chairman determines.
(2) At a meeting held by audio or audio-visual means, unless a poll is demanded, shareholders signify individually their assent or dissent by voice.
(3) A declaration by the Chairman that a resolution is carried by the requisite majority is conclusive evidence of that fact unless a poll is demanded.
(a) not less than five shareholders having the right to vote; or
(b) shareholders representing not less than 10% of the total voting rights of all shareholders having the right to vote; or
(c) shareholders holding shares on which the aggregate amount paid up is not less than 10% of the total paid up on all shares conferring that right.
On a show of hands each shareholder present counts once, whatever their holding. Only on a poll is the statutory right in section 37(1)(a) — one vote per share — given effect. A majority shareholder outnumbered in the room must demand a poll.
A poll may be demanded before or after the vote (cl 5(5)), and votes are then counted according to the votes attached to the shares of each shareholder present in person or by proxy and voting (cl 5(6)). Subject to the constitution, the Chairman has no casting vote (cl 5(7)).
Clause 6 — proxies
(1) A shareholder may vote in person or by proxy.
(2) A proxy is entitled to attend and be heard as if the proxy were the shareholder.
(3) A proxy shall be appointed by notice in writing signed by the shareholder, stating whether the appointment is for a particular meeting or a specified term not exceeding one year.
(4) No proxy is effective unless a copy of the notice of appointment is produced before the start of the meeting.
(5) The constitution may require production by a specified time, not earlier than 48 hours before the start of the meeting.
Under clause 5(8), a proxy instrument confers authority to demand or join in demanding a poll, and a demand by a proxy has the same effect as a demand by the shareholder. Under clause 9, a body corporate shareholder may appoint a representative to attend in the same manner as it could appoint a proxy.
Clauses 7, 10, 11 and 12
| Clause | Effect |
|---|---|
| 1 — Chairman | The elected chairman of the board chairs; if absent 15 minutes after the appointed time, or none elected, the shareholders present choose one of their number. Subject to the constitution |
| 7 — Minutes | The board shall ensure minutes are kept; minutes signed correct by the Chairman are prima facie evidence of the proceedings. They form part of the company records under s 164 |
| 10 — Joint holders | The vote of the person named first in the share register and voting is accepted to the exclusion of the other joint holders |
| 11 — Unpaid calls | Subject to the constitution, a share on which a sum due has not been paid may not be voted — other than at a meeting of an interest group |
| 12 — Other proceedings | Except as provided, and subject to the constitution, a meeting may regulate its own procedure |
Clause 8 — putting an item on the agenda
(2) Received not less than one month before the last day for giving notice of the meeting — the board shall circulate the proposal at the company’s expense.
(3) Received not less than seven days and not more than one month before that day — the board shall circulate it at the shareholder’s expense.
(4) Received less than seven days before — the board may, if practicable, circulate it at the shareholder’s expense.
(5) Where shareholders may vote by proxy, the proposing shareholder may include a statement of not more than 1,000 words in support, with their name and address.
(6) The board need not include a statement the directors consider defamatory, frivolous, or vexatious.
(7) Where the shareholder bears the costs, they must deposit or tender a sufficient sum on giving notice.
The difference between clause 8(2) and 8(3) is who pays. Giving notice more than one month before the last day for the meeting notice shifts the cost of circulation to the company — a meaningful saving in a company with many shareholders.
Sources
- Companies Act 1997 — ss 37, 90, 101–106, 164; Schedule 2
Before relying on anything here, read the current text of the Companies Act 1997 and check for later amendments. If a decision matters to you, get advice — start with the Office of the Public Solicitor, or find a firm in the law firms directory.