CHAPTER 1: GENERAL PROVISIONS ABOUT RESOLUTIONS

Clause 258: Resolutions

512.     This clause 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) preserves the common law unanimous consent rule.

Clause 259: Ordinary resolutions

513.     This clause provides a definition of an ordinary resolution, whether of the members generally or of a class of the members. A simple majority - that is, over 50% - is required.

Clause 260: Special resolutions

514.     This clause provides a definition of a special resolution, whether of the members generally or of a class of the members. 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.

515.     The main difference from the existing definition in section 378 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(4) and (6) is now dealt with in clauses 295 and 277 respectively.

Clause 261: Votes: general rules

516.     This clause 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.

Clause 262: Votes: specific requirements

517.     This clause 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.

Clause 263: Votes of joint holders of shares

518.     This clause 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.

Clause 264: Effect of provision in company's articles as to admissibility of votes

519.     This clause ensures that nothing in the clauses affects the operation of provisions in the articles which impose a procedure for objecting to and determining the admissibility of a vote. Such procedures are often included in articles to provide certainty as to the outcome of a meeting. A typical provision might say that objections to votes have to be raised with the chairman at the meeting and that his decision is final.

CHAPTER 2: WRITTEN RESOLUTIONS

520.     The provisions of this Chapter replace the present rules on written resolutions of private companies. A key change (apparent from clauses 259 and 260) is that where the existing statutory procedure requires unanimity, the procedure in the Bill does not. Consequently, the clauses 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

Clause 265: Written resolutions of private companies

521.     This clause 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 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.

Clause 266: Eligible members

522.     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

Clause 267: Circulation date

523.     This clause ensures 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).

Clause 268: Circulation of written resolutions proposed by directors

524.     This clause provides for the circulation of written resolutions by directors of the company. A company must circulate a written resolution either by sending 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. The latter would allow companies to pass round a document or email rather than sending out several copies.

Clause 269: Members' power to require circulation of written resolution

525.     This clause 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.

Clause 270: Circulation of written resolution proposed by members

526.     This clause specifies what a company has to do when it is required under clause 269 to circulate a resolution and accompanying statement.

Clause 271: Application not to circulate members' statement

527.     This clause enables the court on application to relieve the company of an obligation to circulate a members' statement if in the court's view the right to require circulation is being abused. This mirrors clause 292(2) (application not to circulate members' statement relating to resolutions to be passed in general meeting).

Agreeing to written resolutions

Clause 272: Procedure for signifying agreement to written resolution

528.     Under this clause, 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 clause 274 (sending documents relating to written resolutions by electronic means), the member will have to signify his consent in hard copy (see paragraph 6 of Schedule 5 (conditions for use of communications in electronic form)).

529.     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.

Clause 273: Period for agreeing to written resolution

530.     This clause 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

Clause 274: Sending documents relating to written resolutions by electronic means

531.     This clause needs to be read together with the provisions about electronic communications to companies in Part 3 of Schedule 5. 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.

Clause 275: Publication of written resolution on website

532.     This clause should be read in conjunction with the provisions about communications by means of a website by a company other than a traded company under Part 4 of Schedule 6. This clause, together with those provisions, allow a company in some circumstances to publish a written resolution on a website rather than send it to a member individually.

Clause 276: Relationship between this Chapter and provisions of company's articles

533.     This clause 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.

CHAPTER 3: RESOLUTIONS AT MEETINGS

534.     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.

535.     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 Bill 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

Clause 277: Resolutions at general meetings

536.     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.

537.     An important difference from the position under section 378(6) is that, under this clause, a resolution must be passed in accordance with the relevant provisions of the Bill and with 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

Clause 278: Directors' power to call general meetings

538.     This clause 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.

Clause 279: Members' power to require directors to call general meeting

539.     This clause, together with clauses 280 and 281, 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 is no change in the threshold required for a meeting request, that is, members with voting rights holding at least 10% of the paid-up capital or, in a company with no share capital, members holding 10% of the total voting rights.

540.     There are two main changes. The first is that subsection (3)(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 (4) defines what type of resolution may be properly moved. For example, if the resolution would have no effect, then it cannot be properly moved. The second is that requests in electronic form are permitted.

Clause 280: Directors' duty to call meetings required by members

541.     This clause 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, this should be included in the notice of the meeting.

Clause 281: Power of members to call meeting at company's expense

542.     This clause enables the members to call a meeting in the event that the directors fail to call a meeting on 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.

Clause 282: Power of court to order meeting

543.     This clause 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

Clause 283: Notice required of general meeting

544.     This clause 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. A general meeting may be called on shorter notice if the requisite majority of members agree.

545.     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.

Clause 284: Manner in which notice to be given

546.     This clause should be read in conjunction with the general requirements for different types of companies in sending and supplying information as set out in Part 28 and Schedules 6 and 7.

Clause 285: Publication of notice of meeting on website

547.     This clause 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.

Clause 286: Persons entitled to receive notice of meetings

548.     This clause 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 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.

Clause 287: Contents of notices of meetings

549.     This clause 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.

Clause 288: Resolution requiring special notice

550.     This clause 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 clauses 152 and 498) or in relation to written resolutions have their own special procedure (see clauses 501 and 502).

551.     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.

Clause 289: Accidental failure to give notice of resolution or meeting

552.     This clause 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

Clause 290: Members' power to require circulation of statements

553.     This clause, together with clause 291, replaces sections 376 and 377 of the 1985 Act (to the extent that they relate to members' statements) and provides a right for members to require the company to circulate a statement of up to 1,000 words.

554.     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.

Clause 291: Company's duty to circulate members' statement

555.     This clause 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.

Clause 292: Application not to circulate members' statement

556.     This clause replaces section 377(3) of the 1985 Act. It enables the court on application to relieve the company of an obligation to circulate a members' statement if in its opinion the right to require circulation is being abused.

Procedure at meetings

Clause 293: Quorum at meetings

557.     This clause replaces sections 370(4) and 370A of the 1985 Act. It sets a quorum for a meeting of one "qualifying person" in the case of a single member company and - as a default - two "qualifying persons" in any other case. Subsections (2) and (3) ensure that a member, corporate representative or proxy present at the meeting may all be "qualifying persons", but excludes the possibility of two or more corporate representatives or proxies of the same member comprising a quorum. Under the replaced provisions, proxies and corporate representatives do not count towards a quorum in companies with more than one member.

Clause 294: Chairman of meeting

558.     This clause reproduces the effect of section 370(5) of the 1985 Act and provides a default provision where the company's articles are silent to allow any member to be elected as chairman of a general meeting by a resolution of the company passed at the meeting.

Clause 295: Declaration by chairman on a show of hands

559.     This clause replaces section 378(4) of the 1985 Act and part of article 47 of Table A. This provision ensures that the chairman's declaration of a vote taken on a show of hands is conclusive evidence of the resolution being passed or lost without further proof being provided, unless a poll is demanded on the resolution.

560.     There are two main differences from section 378(4), both of which are drawn from Table A. First, if the demand for a poll is withdrawn, then the chairman's declaration will stand. Second, the minutes of the meeting also provide conclusive evidence of the chairman's declaration. This clause is intended to provide certainty by preventing members from challenging a declaration of the chairman as to the votes cast on a resolution at a meeting otherwise than by calling a poll.

Clause 296: Right to demand a poll

561.     This clause replaces section 373 of the 1985 Act. It restricts companies' ability, through their articles, to exclude members' rights to call a poll. However, it allows articles to exclude the right to a poll on the election of the chairman of the meeting and the adjournment of the meeting. The clause provides for three effective types of demands for a poll, including a demand made by at least 5 members with a right to vote on the resolution.

Clause 297: Voting on a poll

562.     This clause replaces section 374 of the 1985 Act. This provision recognises that a member may hold shares on behalf of third parties and allows the member to cast votes in different ways according to instructions from his clients. The reference to class meetings in section 374 is dealt with by clause 309.

Clause 298: Representation of corporations at meetings

563.     This clause replaces section 375 of the 1985 Act. The clause expressly provides for the appointment of multiple corporate representatives. This is possible under section 375.

564.     The effect of appointing multiple representatives under the existing law is in some cases unclear. The clause spells out the position. Any one of the corporate representatives will be entitled to vote and exercise other powers on behalf of the member at meetings, but in the event that representatives' votes or other powers conflict, the corporation is deemed to have abstained from exercising its vote or power. If a corporation wishes to appoint people with different voting intentions or with authority to vote different blocks of shares, they should appoint proxies.

Proxies

Clause 299: Rights to appoint proxies

565.     This clause sets out new provisions for the appointment of proxies, expanding on the existing rights given under section 372 and Table A of the 1985 Act. It puts on a statutory footing certain rights that under the 1985 Act are subject to the articles.

566.     In future, members of both private and public companies will have the right to appoint more than one proxy. All proxies will be able to attend, to speak and to vote at a meeting. As to the voting rights of a proxy on a show of hands, see clauses 261 and 262. The effect of those clauses is that the default position will be that, where a member appoints more than one proxy, each proxy will have a vote. The articles will be capable of restricting the number of votes of the proxies, provided that they still have at least one vote between them.

Clause 300: Notice of meeting to contain statement of rights

567.     This clause replaces sections 372(3) and 372(4) of the 1985 Act with changes consequential on the extended rights to appoint proxies under clause 299. The new provision requires every notice calling a meeting to contain a statement informing the member of his rights to appoint one or more proxies and any more extensive rights conferred by the company's articles. Failure to include such a statement will not invalidate the meeting, but is an offence attracting a fine for every officer of the company found in default.

Clause 301: Company-sponsored invitations to appoint proxies

568.     This clause reproduces the effect of section 372(6) of the 1985 Act and requires a company to ensure that if it invites members to appoint a particular person or persons as proxy, such an invitation must be issued to all members entitled to vote at the meeting. Subsection (2) lists two exceptions to the requirement. Failure to comply attracts a fine for every officer in default.

Clause 302: Notice required of appointment of proxy etc.

569.     This clause replaces section 372(5) of the 1985 Act. There are two changes. The first relates to the timing required for a notice of proxy appointment. The new provision ensures that weekends, Christmas Day, Good Friday and any bank holiday are excluded from the time counting towards the minimum 48 hour notice required to appoint proxies. This means, for example, that for a meeting to be held at 3.00 pm on a Tuesday after a bank holiday Monday, the cut-off point for proxy appointment will be 3.00 pm the previous Thursday, not 3.00 pm on Sunday as under the 1985 Act. The second is that polls which are not taken immediately are covered by the rules as well as meetings and adjourned meetings.