|An excerpt from Lawpack's Limited Company Formation Kit.|
When you’re managing a limited company, most of the day-to-day running of a limited company is carried out by you and the other company directors. So you won’t really need to worry about holding shareholders’ meetings, unless a very important issue arises.
Occasions when you may need to hold a shareholders’ meeting are if issues arise concerning capital or changing the limited company’s constitution, which are issues decided by the shareholders.
In some cases directors and shareholders of a limited company will be the same people.
Limited company shareholders act officially as a group. This means that you can either call or arrange for the shareholders to sign a written company resolution or respond to an email.
Certain rules and procedures have to be followed in order to call and conduct a shareholders’ meeting:
Notice given for a shareholders’ meeting
Shareholders must receive advance warning of shareholders’ meetings:
Shareholders’ meeting proxy
Each limited company shareholder may appoint someone to attend the shareholders’ meeting on their behalf (a proxy), if they’re unable to attend. The proxy may attend and speak at the shareholders’ meeting and vote on a poll on the shareholder’s behalf. The proxy may now vote on a show of hands.
The notice calling the shareholders’ meeting should inform shareholders that they are entitled to appoint a proxy to attend, speak and vote in their place and that the proxy need not be a shareholder.
The proxy form must be lodged with the limited company within a specified period before the shareholders’ meeting is held (this period cannot be longer than 48 hours).
Shareholders’ meeting quorum
Shareholders act collectively, and not individually, so a certain number of shareholders must be present before a shareholders’ meeting can be held. This is known as a ‘quorum’.
Normally, a minimum of two shareholders present either in person or by proxy constitutes a quorum. But in the event of the limited company only having one shareholder, s/he will not unnaturally form a quorum.
Company resolutions are passed by a majority of the shareholders at shareholders’ meetings.
Voting at a shareholders’ meeting
Shareholders vote to make their collective decisions. The vote which takes place at the shareholders’ meeting can be made in one of two ways:
The number of votes required to pass a particular item depends on whether the company resolution is an ordinary resolution or special resolution.
Ordinary company resolutions
Ordinary company resolutions proposed at a general meeting must be approved by a simple majority (i.e. more than 50 per cent) of the votes cast at the shareholders’ meeting, whether by a show of hands or on a poll.
Two examples of many types of limited company business which must be approved by ordinary company resolution include:
Special company resolutions
Special company resolutions must be passed by a three-quarters majority of the votes cast at the shareholders’ meeting, whether by a show of hands or on a poll.
Examples of limited company business which must be approved by special company resolution are:
Some ordinary company resolutions and all special company resolutions must be filed at Companies House within 15 days of being passed. Sometimes forms and fees must also accompany the company resolutions.
Published on: October 11, 2010