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CHAPTER 3: RESOLUTIONS AT MEETINGS

544. This Chapter replaces sections 368 to 377, 379 and 381 of the 1985 Act and makes provision about resolutions passed in general meeting. The provisions apply equally to private and public companies. The new provisions reflect the fact that private companies will no longer have to hold AGMs. For example, the provisions about circulation of statements in sections 376 and 377 of the 1985 Act have been separated from the provisions on circulation of resolutions prior to an AGM – which are in Chapter 4. The Act repeals section 367 of the 1985 Act which gives the Secretary of State a power to call a meeting where there is no AGM.

General provisions about resolutions at meetings

Section 301: Resolutions at general meetings

545. This is a general provision about the circumstances in which resolutions at meetings are validly passed. It extends to all resolutions the principle in section 378(6) of the 1985 Act relating to special resolutions: that passing a resolution in a meeting is not just a question of obtaining the right majority but of using the correct procedures. An important difference from the position under section 378(6) is that, under this section, a resolution must be passed in accordance with the relevant provisions of the Bill and any additional requirements imposed by the company’s articles. So, where there are mandatory provisions in the Bill (like those about proxies’ rights to vote) these cannot be avoided by making alternative provision in the articles; and where provision is made about meetings in a company’s articles, these must also be complied with.

Calling meetings

Section 302: Directors’ power to call general meetings

546. This section puts into statute part of the default regulation at article 37 of Table A which allows the directors to call a general meeting. The company’s articles will set out how the directors act collectively.

Section 303: Members’ power to require directors to call general meeting

547. This section, together with sections 304 and 305 make provision similar to that in section 368 of the 1985 Act requiring the directors to call a general meeting if requested by the members. There are three main changes.

548. First, there is a change in the threshold required for a meeting request. For public companies this remains members with voting rights holding at least 10% of the paid-up capital. For private companies the threshold is 5% or 10% of the paid-up capital (or, in a company with no share capital, 5% or 10% of the total voting rights) depending on when there was last a meeting in advance of which members had a right – equivalent to the right under this clause (see below) – to circulate resolutions. The threshold is lower if there has been no such meeting in the last twelve months. Second, as indicated above, subsection (4)(b) extends the provisions of the 1985 Act by enabling members to include the text of a resolution to be moved at the requested meeting. Subsection (5) defines what type of resolution may be properly moved. For example, if the resolution would have no effect, then it cannot be properly moved. Third, requests in electronic form are permitted.

Section 304: Directors’ duty to call meetings required by members

549. This section sets time limits within which the directors must call and hold a meeting required by members. Subsection (2) requires that if the members’ request identifies a resolution to be moved at the meeting, notice of this resolution should be included in the notice of the meeting.

Section 305: Power of members to call meeting at company’s expense

550. This section enables the members to call a meeting at the company’s expense in the event that the directors fail to call a meeting on the members’ request. Subsections (6) and (7) provide for members to be reimbursed appropriately and that the directors are penalised directly by the reimbursement being taken out of the fees or other remuneration due to them.

Section 306: Power of court to order meeting

551. This section reproduces the effect of section 371 of the 1985 Act and gives the court power to order a meeting of the company and to direct the manner in which that meeting is called, held and conducted.

Notice of meetings

Section 307: Notice required of general meeting

552. This section replaces part of section 369 of the 1985 Act. It retains the current minimum notice period requirement of 21 days for public company AGMs, with 14 days’ notice required for all other general meetings (whether public or private company general meetings). A general meeting may be called on shorter notice if the requisite majority of members agree. The key substantive change from the position under existing legislation is that the requisite majority required to agree a short notice period has been reduced for private companies from 95% to 90% of the voting rights, although the articles may specify up to 95% if the company wishes. For public companies, the majority required to agree a short notice period remains at 95% of the voting rights.

Section 308: Manner in which notice to be given

553. This section should be read in conjunction with the general requirements for companies in sending and supplying information as set out in Part 37 and Schedule 5.

Section 309: Publication of notice of meeting on website

554. This section contains some specific provisions on communications by means of a website and needs to be read with the general provisions on communications referred to above. The overall effect is similar to that of the website provisions in the current section 369 of the 1985 Act.

Section 310: Persons entitled to receive notice of meetings

555. This section puts into statute part of article 38 of Table A. The new provision ensures that notice of meetings must be sent to all members, directors and any person entitled to a share as a consequence of the death or bankruptcy (or the equivalent in Scots insolvency law) of a member. The provision is subject to any enactment and to any provision in the articles. This means that a company may, for example, make provision in its articles to stop sending notice of meeting to members for whom the company no longer has a valid address.

Section 311: Contents of notices of meetings

556. This section puts into statute another part of article 38 of Table A. The new provision ensures that the notice of meeting must include the time, date and place of the meeting and, subject to the articles, the general nature of the business to be conducted at the meeting.

Section 312: Resolution requiring special notice

557. This section replaces section 379 of the 1985 Act setting out the requirements for special notice resolutions. It makes provision only in relation to resolutions passed at meetings. This is because the resolutions for which special notice is required are either resolutions that are not capable of being passed as written resolutions (in the case of sections 168 and 510) or in relation to which written resolutions have their own special procedure (see sections 514 and 515).

558. There is no change from the existing law whereby at least 28 days’ notice must be given to the company of the intention to move a resolution requiring special notice. Where it is not practicable for the company to give members notice of such a resolution at the same time as it gives notice of the meeting at which the resolution is to be moved, the company must in future give at least 14 days’ notice either by newspaper advertisement or by any other manner allowed by the articles.

Section 313: Accidental failure to give notice of resolution or meeting

559. This section expands on article 39 of Table A. It contains the rule that an accidental failure to give notice of a resolution or a general meeting is generally disregarded. Under subsection (2), this rule can be altered by the articles in some but not all cases.

Members’ statements

Section 314: Members’ power to require circulation of statements

560. This section, together with section 315, replaces sections 376 and 377 of the 1985 Act and provides a right for members to require the company to circulate a statement of up to 1,000 words. The key policy change is that where the statement relates to a resolution or other matter to be dealt with at a public company’s AGM and is received before the company’s financial year-end, the shareholders are not required to cover the costs of circulating the statement. There are two other notable changes. The first is that the shares relied on to trigger the circulation of a statement must in each case carry rights to vote on the relevant resolution rather than just at the meeting. The second is that requests in electronic form are permitted.

Section 315: Company’s duty to circulate members’ statement

561. This section replaces the remainder of sections 376 and 377 of the 1985 Act and specifies what the company is to do when it is required to circulate a members’ statement. The statement must be circulated in the same manner as notice of the meeting and at the same time, or as soon as reasonably practicable, after the company gives notice of the meeting. Where the company fails to comply with the provisions of this section an offence is committed by every officer of the company who is in default.