LAW

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LAW00004 Company Law

SCHOOL OF LAW & JUSTICE

Session 2, 2018

TOPIC 5.2 Corporate management(cont.)

Activities 5.2.1 & 5.2.2

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Activity 5.2.1

© John ORR.

SG p 88

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Poll?

•  Jones, Smith & Brown may be able to demand a poll, depending on what percentage of votes they have, or precisely what their constitution says on the number of members or percentage of vote.

•  The right to demand a poll at a meeting is contained in section 250L. The constitution cannot specify more than 5 members or 5% of voting rights, but it can specify fewer/ less, often 3 rather than 5 members. Jones, Smith & Brown need to check what their constitution says. It may be that they hold proxies, see section 249Y.

Activity 5.2.1

• If Jones does not have enough votes he could test the mood of the meeting by simply making the demand and hoping others join him.

• When a poll may be demanded section 250L

• How a percentage of votes is determined section 250L(4)

• Manner of taking a poll section 250M © John ORR.

Activity 5.2.1 • The outcome here is that subject to the constitution (or replaceable rules if they apply) then they must obtain support from at least two other members, or have support of 5% of the voting rights between them.

© John ORR.

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•  Notice period for MM? •  Can CC specify some shorter notice for listed? •  section 1322 •  definition of special resolution •  Notice given by post?

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Notice for EGM?

Notice for EGM?

•  Jones, Smith & Brown may also challenge the lack of notice for the meeting, because at least 21 days has not been given on these facts, as required by section 249H

•  If listed company section 249HA ( 28 days).   •  Note: Section 1322 and the definition of special resolution

in section 9, and 249L (c) •  See also section 249J(4) as to when notice is given by

post.

Activity 5.2.1 • The defence will rely on section 1322 • This provision ensures that a procedural irregularity will not invalidate proceedings (including meetings) unless the Court is of the opinion that the irregularity has caused or may cause substantial injustice and there is no other remedy.

• So see section 1322(2) and (3) and the use of section 1322(4) to get into court and challenge the company's actions.

• The problem of course is that until challenged the company will simply proceed.

© John ORR.

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Activity 5.2.2

SG p 88

Activity 5.2.2

This activity asks:

What avenues are available to a member when the directors refuse to call an extraordinary GM when requested by a member?

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Activity 5.2.2

•  Section 249D - directors must call a GM within 21 days (+ hold within 2 months of request) section 249D(5)

•  Section 249D(1) on the request of 5% votes •  Form of the request section 249D(2) •  Procedure in section 249E (members with more than

50% of the votes) following the failure of directors to call a meeting under section 249D

•  Note also the separate procedures in: •  section 249F call GM by members and •  section 249G call GM by court order

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Activity 5.2.2 If general meeting is not called within 21 days of the request and held within 2 months •  a member who makes the request, if he/she/it has or

has the support of more than 50% of the votes (of members who make the request)

•  may call and arrange to hold a GM section 249E

•  NOTE that the procedure in section 249E relates to section 249D and only applies if directors refuse to call the meeting.

© John ORR.

Activity 5.2.2 If the GM is held under section 249E •  Company must pay all reasonable expenses section

249E(4) •  Company may recover expenses from the directors

who failed to call the meeting; section 249E(5) •  But directors are not liable if they took all reasonable

steps to ensure compliance under section 249D

© John ORR.

Activity 5.2.2 NOTE ALSO •  A member with at least 5% of the votes that may be

cast at a GM may call and arrange to hold a GM under section 249F

•  Members must pay the expenses etc: section 249F(1) •  Court may order a meeting (on application of a

director or member) if it is impracticable to call the meeting in any other way section 249G

•  Court-ordered meeting > court may give directions re convening, holding, or conducting meeting or ancillary directions section 1319

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© John ORR.