Process of Voting upon Resolutions in a Company Setup UK

04 Oct

To run a company smoothly, it is necessary to take into consideration the views of each of the members. Hence this can be done via gathering the members on a single platform. This may also allow them to know about other members better. This platform can be used to share the views of the members and know the future goals of the company and the achievements made so far. Such a platform may be in the form of a meeting. Moreover, it may also give a chance to develop an understanding between the board and the members. This article discusses about arranging meetings in a company setup UK and how can they be used in knowing the views and ideas of all the members.

Role of Meetings

A company may arrange meetings for the members to get together and discuss matters that are listed in the agenda of the meeting. Every company that follows the Companies Act is required to arrange at least one general meeting each year. The general meeting provides a platform to the shareholders and the chairman to judge the progress made each year by the company.  A general meeting may be headed by a chairman. The agenda for the general meeting must include annual financial records and transactions made by the company. This data is collected by the Registrar, which is the key member for companies house set up. Any transaction made, all the minute details of the shares as well all the resolutions passed need to informed to the Registrar. A meeting may be called for the purpose of knowing views of the members about any idea or act that any of the members wants the company to work on. As a consequence, the idea is either passed or rejected, depending upon the extent of support it gets. Moreover, members are allowed to request meetings per Statutory laws. However, in routine case, the board has to call for meetings. But members with 5% shares can also get a meeting arranged for themselves.

Board of Directors

A Director is given the managerial responsibilities of any unit of the company. Hence the presence of more than one director is a common practice in the companies. Collectively the directors form a group, known as “Board of Directors”. It is a compulsory part of ltd formation UK as well as other forms of company in United Kingdom.

Involving shareholders in the meeting

The shareholders are an integral part of the meeting. They are given the right to certain decisions. Collectively they may bring big changes in the system. For instance, they may remove any director or auditor if they are not given any protection. Shareholders are allotted votes per share in some cases. Where as in others the weight on their votes may be greater than routine.

Presenting ideas in the meetings

If any member thinks of an act that he believes should be implemented by the company, he is given the right to share that idea with the rest of the company via resolution.

Voting upon a Resolution

To pass or reject a resolution, a voting may be conducted within or without a meeting. Depending upon the nature of resolution and the apparent majority of support, a meeting may be called or not for voting. Voting is a legal members and is often considered as their property right. Hence in any global company formation UK the shareholders eligible for voting should not be deprived of their voting right unfairly.

However, it may seem a simple process, it may face the following two problems:

  • It may be possible that the shareholders are utterly not eager to vote
  • The second problem may be that they do vote but under the command of someone who does not own any share.

It is because of these two problems that the legal right of the shareholders may not be used legitimately. And hence, their authority of decision making is suppressed. However, the problems can be solved. Where the shareholders do not vote, the fiducial investors may take a decision in the best interests of the grantees of a certain trust. The second issue leads to finding financial benefit in the share and then voting accordingly.

There are two by which the votes can be collected. 

  • A mere show of hands and then counting the number of hands roughly. Although this approach is simple, less time consuming and usually suggested by the articles, it has the drawback of being less accurate.
  • Conducting a poll whenever it becomes unavoidable. A poll can be conducted by providing each member with paper with the option of accepting or rejecting the resolution. Hence, they have to show their consent via signing for their favourite option. A poll is required where a more accurate voting becomes necessary.

It depends upon the articles that voting via post is valid or not. Because usually vote by post is not taken into any consideration unless the articles allow it.

Protection from drawbacks of Voting by hands

As mentioned above, the voting by hand is not as accurate as a poll. So there must be some security or guarantee against it. Henceforth, the Model Articles bestow the right of demanding a poll at either of the three instants:

  • When the meeting is yet to be conducted
  • When the voting via show of hands is yet to be conducted
  • When the voting via show of hands has been conducted as in Model Article 44 for private companies

Additionally, taking away the right to ask for a poll from the members cannot be done via articles. As companies act does not allow for it. Moreover, section 329 of Companies Act gives a proxy also the right to call a poll.

Eligibility for voting

The shareholders may keep trading their shares continually. Hence, it becomes difficult to decide for giving the voting authority. Uncertificated Securities Regulations for public companies provides a solution to this indecisiveness. The record of not more than past two days, prior the meeting, is considered. Hence allowing the shareholder to vote when he has given away his share.

Advertising required for voting

Section 341 of Companies Act obliges the publicity of votes on the website. The details of votes should be provided on the website. Moreover, the minute details of all the resolutions discussed in a general meeting and the rest of the detail of the general meeting should be kept in record for 10 years as per section 355 of Companies Act.

Passing Resolutions outside a meeting 

Resolutions can be passed outside a meeting via written resolution. However, such resolutions require the approval, showing the resolution has been passed, in the form of any director or secretary’s signature. However, to provide a proof for the proceedings of any meeting, the Chair has to give approval via signing the minutes. The approval is a presumption as long as it is not proved that the meeting is not proceeding. In a global company formation UK many important subjects may be discussed and voted upon. It may include any global deal or transaction or any act that is practised globally. Hence it is necessary to bring these matters to the table and decide about them in a peaceful manner. Presenting resolutions helps collect the approval or disapproval of members peacefully.

Also the presence of quorum is mandatory while the resolutions are passed, otherwise the resolutions are considered invalid. In case of unanimous voting, the passed resolution should be submitted to the Registrar.

Voting upon Removal of director or auditor

In case of unanimous consent, the meeting needs not to be arranged for the passage of resolution. However, in matters like removal of director or auditor, it is necessary to call a meeting and to issue a special notice, per section 168 and section 510 of Companies Act. This is necessary to give the director a chance to defend himself by speaking in the meeting.

Chairing the Meeting

A resolution may be used to elect a chair from the members. However, the rulings in section 319 of Companies Act must be followed for this election.  The board’s chairing is performed by same member who chairs the meeting. It is provided in Model Article 31 in case of public companies and Model Article 39 in case of private companies. The sound and fair conduction of business during the meeting is the utmost responsibility of the Chairperson. He may be assisted a legal advisor.

Holding a meeting in abeyance

Model articles 33 for public sector and 41 for private sector provide the valid reasons for the suspension of meeting. A meeting may be suspended but the resolution is passed on the actual date of its passage. The date adjournment will not be considered as the date for passage of certain resolution per section 332 of Companies Act.

The criteria presented by John case for the suspension of a meeting must be satisfied in order to carry out the adjournment. This is an obligation of Companies Law.

Moreover, a notice is not compulsory if the suspension constitutes of 14 days or less. Otherwise, a notice of 7 days must be given.

Arranging meetings for particular group of members

It may be sometimes important to conduct a meeting of only a particular group of the members. The same case may arise to conduct general meetings for a specific group per section 334 and 352 of Companies Act. However, no right is given to any class regarding forcefully getting a meeting arranged for itself. Likewise, the court is given no such authority as stated in section 334 part 2 and section 335 part 2 of Companies Act.

The Board order for a class to arrange a meeting to know about its assent to any issue but the class cannot do it on its own even if the matter concerns it.

Thus whilst the Board might require the Class to meet, to gain its consent for a certain action, the Class has no general right to meet to consider issues with concern it.

Medium of communication in the company

In this era of technology, section 1145 of Companies Act allows the communication in the company to be done via electronic communication. The documents such as yearly reports and accounts may be e-communicated using the website. But a printed version may be asked for by the member. The e-communication should better be cheap.

It should also be noted that while communicating with the firm, a printed version of the documents is supported, However, if by section 333 of Companies Act, the company nootifies its members to use a e-communication by sharing any electronic address with them.

Electronic versions of signed copies are acceptable as long as they give a clear information about the sender and there is no uncertainty in it. This has been stated in section 1146 of Companies Act.

The authority of members to conduct legal proceedings

The members can legally bring a matter in the court. That is, they are at liberty to initiate an act of litigation. Company law states that for the commencement of litigation a mere ordinary resolution is required. The members can ask for litigation despite the unwillingness of the board to act as stated in Foss case. The sole goal, however, of the member should be to benefit the company in the best manner.

Whether it is a ltd formation UK or a non- ltd form of company, the rules governing the voting process are mostly the same.

* The email will not be published on the website.