COMPANY LAW NOTES:
SHAREHOLDERS AND COMPANY MEETINGS:
A company acts through its members in the general meeting, its directors
and its employee’s.
S66 (1): The day-to-day running of the company is the responsibility of the
directors, (executive directors’), which has the authority to exercise all of the
powers and functions of the company, except to the extent that the Act or
memo of incorporation provide otherwise. Many NB decisions of the
directors may have to be approved by the shareholders
A shareholder: is the holder of the shares issued by the company = they get
the right to vote in general meetings of members of the company.
Shareholders do not have any duties towards the company, but they may
have duties or obligations towards each other in terms of a shareholders’
agreement.
The term shareholder is used in respect of profit companies and the term
member is used in respect of non profit companies.
MEETINGS
Notice convening a meeting must be given to all persons who are entitled to
receive notice of the meeting.
A meeting must be convened at a time, date and place, which is
accessible to the members of the company.
Quorum must be present = A quorum is the minimum number of
members who have to be present at the meeting before the meeting
can commence.
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, the notice of the
meeting must include the record date.
4. The notice should explain the general purpose of the meeting and any
other specific purposes.
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.
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.
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.
At the meeting the proxy is entitled to vote as he or she thinks fit unless the
shareholder has indicated otherwise on the proxy form.
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.
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
1973 Companies Act: don’t need to hold an AGM if all the members
entitled to attend consent in writing. Such a resolution will be passed as if
the meeting was held.
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
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
A resolution that can be voted on at a shareholders’ meeting may instead be
submitted for consideration to the shareholders and voted on in writing by
shareholders entitled to voting rights in relation to the resolution.
E.g. An election of a director
Within ten business days after adopting a resolution the company must
deliver a statement describing the results of the vote, consent process, or
election to every shareholder who was entitled to vote on the resolution.
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 company’s tribunal may grant an extension if good cause is shown.
The following matters must be discussed at every AGM:
Director’s report, financial statements and 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.
If a company fails to convene a meeting for any reason, a shareholder may
apply to a court for an order requiring the meeting
The company must compensate the shareholder who applies to the
Companies Tribunal or to a court for the costs of those proceedings. Failure
to hold a required meeting does not affect the existence of a company or the
validity of any action by the company.
Quorum
SHAREHOLDERS AND COMPANY MEETINGS:
A company acts through its members in the general meeting, its directors
and its employee’s.
S66 (1): The day-to-day running of the company is the responsibility of the
directors, (executive directors’), which has the authority to exercise all of the
powers and functions of the company, except to the extent that the Act or
memo of incorporation provide otherwise. Many NB decisions of the
directors may have to be approved by the shareholders
A shareholder: is the holder of the shares issued by the company = they get
the right to vote in general meetings of members of the company.
Shareholders do not have any duties towards the company, but they may
have duties or obligations towards each other in terms of a shareholders’
agreement.
The term shareholder is used in respect of profit companies and the term
member is used in respect of non profit companies.
MEETINGS
Notice convening a meeting must be given to all persons who are entitled to
receive notice of the meeting.
A meeting must be convened at a time, date and place, which is
accessible to the members of the company.
Quorum must be present = A quorum is the minimum number of
members who have to be present at the meeting before the meeting
can commence.
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, the notice of the
meeting must include the record date.
4. The notice should explain the general purpose of the meeting and any
other specific purposes.
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.
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.
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.
At the meeting the proxy is entitled to vote as he or she thinks fit unless the
shareholder has indicated otherwise on the proxy form.
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.
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
1973 Companies Act: don’t need to hold an AGM if all the members
entitled to attend consent in writing. Such a resolution will be passed as if
the meeting was held.
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
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
A resolution that can be voted on at a shareholders’ meeting may instead be
submitted for consideration to the shareholders and voted on in writing by
shareholders entitled to voting rights in relation to the resolution.
E.g. An election of a director
Within ten business days after adopting a resolution the company must
deliver a statement describing the results of the vote, consent process, or
election to every shareholder who was entitled to vote on the resolution.
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 company’s tribunal may grant an extension if good cause is shown.
The following matters must be discussed at every AGM:
Director’s report, financial statements and 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.
If a company fails to convene a meeting for any reason, a shareholder may
apply to a court for an order requiring the meeting
The company must compensate the shareholder who applies to the
Companies Tribunal or to a court for the costs of those proceedings. Failure
to hold a required meeting does not affect the existence of a company or the
validity of any action by the company.
Quorum
