What is the Process of a Shareholder Meeting?
A company’s articles will set out the rules for holding a meeting, including the notice requirements, the quorum, the right to attend and vote and the rules for adjourning the meeting.
Key issues to note include:
- Voting rights – different classes of shareholders may have different voting rights. As an example, preference shareholders are often limited to voting on matters affecting dividends or a proposal to wind up the company.
- Voting procedure – voting will normally be by a show of hands, which means each shareholder has one vote. The rules governing who can demand a poll are set out in the Companies Act 2006 and a company’s articles and include the chairperson and a required number or proportion of the shareholders. A poll requires a fresh vote on the issue, which takes into account the number of shares held by each shareholder, rather than a vote on a show of hands. This can be important if shareholders have appointed multiple proxies or several shareholders have appointed the same proxy but intend to vote in different ways. The result of a poll vote is accurate as it will show exactly how many shares were voted in favour for or against a resolution and can differ considerably from the result of the vote on a show of hands.
- Resolutions – resolutions are either ordinary or special resolutions. Ordinary resolutions require a simple majority to be passed (50%). Special resolutions require a 75% majority.
- Filings – all shareholder special resolutions must be filed with Companies House within 15 days of the meeting. Copies of ordinary resolutions do not normally have to be notified, although there are certain exceptions, e.g. an allotment of shares under S551 of the Companies Act 2006. If an ordinary resolution does need filing, the 15 day time limit also applies. If a special or file able ordinary resolution is passed by written resolution, a copy of the written resolution must be filed at Companies House. Further details can be found on Companies House website, www.companieshouse.gov.uk