Once how to form a company in UK is known, the purpose and procedural requirements of either annual general meetings or other meetings, must be understood. Hence the article serves this purpose.
Purpose of Meetings
The structure and importance of meetings should be known when set up a new company UK. The purpose of meetings in a company is to provide a platform where new ideas can be shared with the members and any decision that has to be made can be voted upon by the members. Hence, passing resolutions is what meetings are intended for. Nevertheless, accounts and annual reports are discussed in general meetings. The general meetings may be held annually.
If the members give their assent to any resolution by the required majority, the resolution being voted upon is passed in the meeting. The board is then obliged to implement those actions in the form of act of the company.
There are two types of resolutions. Ordinary and Special Resolutions.
Traditionally, there was a vote allotted to the Chairman for the prevention of gridlock. Nonetheless, the government is of the view that the definition of ordinary resolution in Section 282 annuls any resolution upon which the chairman has voted. However, Gower and Davies do not agree with it.
It should be noted that the decisions unspecified in the act, must have lower, higher, weighted or any other condition as voting requirements specified by the company.
Procedural requirements for the Meeting
As there are procedural requirements to set up a new company UK, there are procedural requirements for calling a meeting as well. A proper notice should be given for the meeting and resolution to be voted upon in that meeting. The meeting should be conducted upon the procedure outlined for it in the act and constitution. When these two conditions are met, the passage of resolution is considered valid.
Article 40 Model Articles allows for public companies permits modification of ordinary articles provided that the scope is not altered materially. Nevertheless, special resolutions can only be modified for grammatical or negligible errors. Nothing has been mentioned about the matter in Articles for private companies.
Gower & Davies are of the view that a modification is allowable merely in case the modification of resolution is done such that none of the members intending for not to attend and vote, and if intending to vote, adopts a different reaction to the modified version. That is, their decisions must not change with the alteration of resolution.
According to Section 312 of Companies Act, this rule is also applicable to ordinary resolutions where “special notice” is mandatory. Therefore, no alteration of matter, can be made in the resolution mentioned in the special notice.
However, an ordinary resolution may principally have amendments. Nevertheless, subjected to comments in Re Moorgate case according to Gower & Davies. The about Articles may limit the liberty of members by allowing the Chairman to deny the modifications that are not notified about 48 hours before via a written notice.
Annual General Meetings
After you open new company UK, the meetings should be organised on annual basis. As Section 336-340 is only applicable to public companies so annual general meeting is not compulsory.
Thus, if a Board having two people, with a restriction of two quorums may get gridlocked completely.
Solution to deadlock
Once you open new company UK, the company may have threat of a deadlock situation. Section 306 is used to break any deadlock created by quorums. As the general law of majority is frustrated by the condition of quorums’ presence in the meeting when the shares are 50:50. If the deadlock via quorum’s condition is intentionally created the rule must not be applicable.
For instance, Re El Sombrero. Gower & Davies believe that it is dependent upon the construction of articles. Unless the requirement of quorum is related to the class rights linked to shares of any of the parties, to be frustrated, the section should not be used.
Another situation where the section cannot be implemented is where the shares are held in unequal proportions by the shareholders. The reason is that Quorum’s presence in the meeting becomes non-obligatory as the resolution can be passed via the consent of majority for written resolution without calling a meeting. Same is the case when court senses that any group intends to use votes for the prevention of an impactful meeting. The court may interfere via Section 306 as in Re British Union case. Personal attendance was set mandatory for voting by the articles. The general meeting was disturbed by minority. Hence, the court ordered to conduct a meeting to vote upon the resolution for the abolishment of personal attendance law.
Presence of all the attendees in meeting room:
Model Article 37(4)-(5) states that for private companies it is not mandatory for all members to be present at the same venue. However, they all should be able to use their power of vote and speak for their right.
Planning the Agenda
The Board conducts general meetings and plans the points to be discussed in the meeting.
Directors have the right to submit statements promoting their resolution. Members with at least shares of 5% or those 100 members who have given £100 each, can circulate a statement of 1000 words supporting their resolution (s314316). To establish company in UK it should be known that the company must bear the circulation charges unless stated by the resolution.
A notice may be made mandatory by the articles of company for other causes as well. For instance, Articles may demand that nobody may get the directorship without the recommendation of Board at a notice of 14 days. Also along with the assent of appointee.
The members do not have the right to suggest any candidate as a substitute at the general meeting.
Substance of the Notice
Following are the things that must be included in the Notice:
CLR proposed the resolution to be submitted also attachment. However, the suggestion was not considered. Although a notice is enough for regular business, in case of a different and new matter, a circular must be attached with it. The circular must contain the justification for Board’s opinion in the matter. Resolutions will remain unconsidered if any false representation is given for the facts in the circular.
The members should be aware enough about the matter so as to decide about attending the meeting. It may require circulars to be sent to them. Hence this shows that the board has a strong position. As they can pass any statement for free. Whereas the members have to pay for it or gather a certain representation of shareholders who can in support of their resolution.
Rules for Attendees
Harben case makes it compulsory for the attendance and voting to be done in person. The Rights Directives of shareholders makes it necessary for the MS to allow for voting through correspondence before the meeting takes place. However, the companies may or may not adopt this method.