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CHAPTER 1: GENERAL PROVISIONS ABOUT RESOLUTIONS

Section 281: Resolutions

523. This section provides that members’ resolutions can only be passed in accordance with the provisions of this Part. There is no equivalent in the current legislation. Subsection (1) allows a private company to pass a resolution either as a written resolution or at a meeting of the members. Subsection (2) allows a public company to pass a resolution only at a meeting of the members. Subsection (3) ensures that where a resolution is required but the type of resolution is not specified, the default will be an ordinary resolution unless the articles require a higher majority. When a provision specifies that an ordinary resolution is required, the articles will not be able to specify a higher majority. Subsection (4) preserves the common law unanimous consent rule.

Section 282: Ordinary resolutions

524. This section provides a definition of an ordinary resolution, whether of the members generally or of a class of the members and whether as a written resolution or as a resolution passed at a meeting. A simple majority – that is, over 50% – is required.

Section 283: Special resolutions

525. This section provides a definition of a special resolution, whether of the members generally or of a class of the members and whether as a written resolution or as a resolution passed at a meeting. A 75% majority is required. If a resolution is proposed as a special resolution, there is a requirement to say so, either in the written resolution text or in the meeting notice. Where a resolution is proposed as a special resolution, it can only be passed as such. The main difference from the existing definition in section 378(2) of the 1985 Act is that there is no longer a requirement for 21 days’ notice where a special resolution is to be passed at a meeting. The subject matter of section 378(3) of the 1985 Act is now dealt with in section 307(4) to (6) (notice required of general meeting), while the subject matter of section 378(4) and (6) is dealt with in sections 320 and 301 respectively.

Section 284: Votes: general rules

526. This section sets out the general rules on votes of members taken by written resolution, on a show of hands at a meeting or on a poll taken at a meeting. These are adapted from section 370 of the 1985 Act and the default regulations in Table A. Subsection (4) allows these general rules to be varied by the company’s articles.

Section 285: Votes: specific requirements

527. This section sets out specific requirements on votes of members, which the company’s articles may not override. Subsections (1) and (2) provide for entitlement to vote where proxies have been appointed and ensure that the articles do not disadvantage a member voting by proxy or proxies. Subsection (3) makes new provision for voting rights on written resolutions, reflecting the fact that they will no longer need to be passed unanimously. A member will have the same number of votes whether passing a resolution on a poll in general meeting or on a written resolution.

Section 286: Votes of joint holders of shares

528. This section puts on a statutory footing what was a default regulation under article 55 of Table A on votes of joint holders of shares. The person whose vote counts is the “senior” holder, the joint holder whose name appears first in the register of members Section 287: Saving for provisions of articles as to determination of entitlement to vote

529. This section makes new provision to preserve the right for a company to require objections to votes to be made in accordance with procedures in their articles. If an objection is overruled, the decision will be final except in cases of fraud and certain other kinds of misconduct detailed in case law where a court may intervene. This provision preserves the current law. The provision ensures, on the one hand, certainty for company by enabling the chairman to settle matters relating to the admissibility of votes in accordance with the articles and, on the other hand, sufficient remedies for members to challenge a decision if they have suffered unfair prejudice.

CHAPTER 2: WRITTEN RESOLUTIONS

530. The provisions of this Chapter replace the present rules on written resolutions of private companies. A key change (apparent from sections 282 and 283) is that where the statutory procedure under the 1985 Act requires unanimity, the procedure in this Act does not. Consequently, the sections are more detailed than sections 381A to 381C of the 1985 Act and set out the procedures for decisions taken outside of a general meeting framework. The use of the expression “written resolution” does not mean that there is a requirement for “writing” in the sense of hard copy.

General provision about written resolutions

Section 288: Written resolutions of private companies

531. This section introduces the written resolution provisions of this Chapter. They apply to private companies only. Subsection (2)(a) and (b) reproduce the two exceptions currently provided for in Part 1 of Schedule 15A to the 1985 Act: a resolution to remove a director or an auditor before the expiration of his term of office may not be passed as a written resolution. These are the only two exceptions to a private company’s right to pass resolutions using the written resolution procedure.

Section 289: Eligible members

532. The eligibility of members to vote on a written resolution is fixed on the day the resolution is circulated. Subsection (2) ensures that the same shares cannot be voted more than once on the same written resolution. If the person entitled to vote changes during the course of that day, the eligible member is the person entitled to vote at the time that the first copy of the resolution is sent or submitted to a member for his agreement.

Circulation of written resolutions

Section 290: Circulation date

533. This section provides that the circulation date of a written resolution means the date on which copies are sent or submitted to members (or if copies are sent on different days, the first of those days.

Section 291: Circulation of written resolutions proposed by directors

534. This section provides for the circulation of written resolutions by directors of the company. A company must circulate a written resolution either by sending it to all eligible members at the same time or, if it can be done without undue delay, submitting the same copy of the resolution to each eligible member in turn or a combination of these. The latter two options allow companies to pass round a document or email rather than sending out several copies.

Section 292: Members’ power to require circulation of written resolution

535. This section enables members to require a written resolution to be circulated. They may also require circulation of a statement about its subject matter. Like the members’ right to require a resolution to be moved at an AGM, the percentage needed is 5% of the total voting rights (or lower if specified in the company’s articles). Subsection (2) specifies some limits on the kind of resolution that may be circulated in this way, designed to stop the power being abused.

Section 293: Circulation of written resolution proposed by members

536. This section specifies what a company has to do when it is required under section 292 to circulate a resolution and accompanying statement. It must circulate the resolution and statement by sending it to all eligible members at the same time or, if it can be done without undue delay, by submitting the same copy of the resolution and statement to each eligible member in turn or a combination of these. The latter two options would allow companies to pass round a document or email rather than sending out several copies. Subsection (3) requires that the members’ written resolution be circulated within 21 days of the company being requested to do so by those members, except that if the written resolution is circulated to members on different days, then the first copy should be dispatched not more than 21 days after the request to circulate the resolution.

Section 294: Expenses of circulation

537. This section provides that the expenses of complying with section 293 are to be paid by the members who requested the circulation of the resolution unless the company resolves otherwise. The company can require the deposit of a sum to meet its expenses before it circulates the resolution, again subject to any resolution to the contrary.

Section 295: Application not to circulate members’ statement

538. This section enables the court, on application by the company or other aggrieved person, to relieve the company of an obligation to circulate a members’ statement under section 293 if in the court’s view the right to require circulation is being abused. This mirrors section 317 in the context of general meetings.

Agreeing to written resolutions

Section 296: Procedure for signifying agreement to written resolution

539. Under this section, a member may signify agreement to a written resolution in hard copy or electronic form, although if the company does not permit electronic form communications, or is not deemed to do so by virtue of section 298, the member will have to signify his consent in hard copy (see paragraph 6 (conditions for use of communications in electronic form) of Schedule 4 (documents and information sent or supplied to a company). Once a member has signified agreement to a written resolution, he cannot withdraw his agreement. This provides certainty for the company as to when the required majority of eligible members needed to agree the resolution has been reached.

Section 297: Period for agreeing to written resolution

540. This section puts a time limit of 28 days for passing a written resolution, unless the company’s articles specify a different period. This means that there will be a definite point when the company can say that a resolution with insufficient support has not been passed.

Supplementary

Section 298: Sending documents relating to written resolutions by electronic means

541. This clause needs to be read together with the provisions about electronic communications to companies in Part 3 (communications in electronic form) of Schedule 4. Taken together, these provisions allow a member to communicate with the company by electronic means where the company has given an electronic address in a document containing or accompanying a proposed written resolution.

Section 299: Publication of written resolution on website

542. This section should be read in conjunction with the provisions about communications by means of a website by a company other than a traded company in Part 4 (communications by means of a website) of Schedule 5 (communications by a company). This clause, together with those provisions, allow a company, provided certain conditions are met, to publish a written resolution on a website rather than send it to a member individually.

Section 300: Relationship between this Chapter and provisions of company’s articles

543. This section ensures that the company’s articles cannot remove the ability of a private company and its members to propose and pass a statutory resolution using the statutory written resolutions procedures of this Chapter.

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