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Corporate Administration and Management 2008

Corporate Administration and Management 2008

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Manchester Metropolitan University Business School
Economics and LawLaw Lecture Handout 8Company Law: Corporate Administration and Management
1
 
Corporate Administration and ManagementA. Meetings
Types of Meetings1. Board of Directors Meeting
This is a meeting of the Board of Directors. Usually all the directors of the company(whether Executive or Non-Executive) will be present. Unless the Articles of thecompany state otherwise, there are no special rules for calling a Board meeting.Section 318 of the Companies Act 2006 states that there must be one ‘qualifying person’in the case of a single member company, and, subject to the provisions of the Articles,two ‘qualifying persons’ in any other case, for the meeting to be valid. The company’sArticles may set their own
quorum
for that particular company.Quorum: This is the minimum number of people that must be present in a meeting for the business to be validly transacted.
2. Annual General Meeting (AGM)
Companies hold such meetings to run the affairs of the company and to enable the Boardto conduct vital business, such as:a)To obtain shareholders’ consent before certain decisions are made which bind thecompany. b)Allowing the shareholders to question the Board on the progress of the companyand to express their views.c)The appointment and removal of directors, the appointment and removal of auditors.d)The decision to award a dividend.The law says that there shall be an Annual General Meeting every year and that no morethan 15 months shall elapse between one meeting and the next. The first meeting must beheld within 18 months of incorporation.If no meeting takes place then the directors are liable to fines and the Secretary of State,on the application of any member, can direct the calling of an AGMA court can call an AGM or an EGM “if for any reason it is impracticable to call ameeting according to the Articles”. N.B: There is no longer a statutory requirement for 
private companies
to hold an AGM.
3. Extraordinary General Meeting (EGM)
This is any general meeting other than the AGM.There are no limits on the number of such meetings in a year or the intervals betweenthem. They will usually be called if 2
 
a)The directors want some business to be approved by the shareholders, and they donot want to wait a year until the next AGM. b)The holders of 10% or more of the paid-up capital carrying voting rights ask for ameeting. If they ask for a meeting and one is not held then they can organize ameeting themselves and their expenses must be paid for by the company
Proceedings at Meetings
A meeting may only proceed to deal with business if the following requirements have been satisfied:1. The correct amount of notice of the meeting has been given (the Board must give 21days notice of an AGM and 14 days for an EGM).2. There is a
quorum
present at the meeting.The meeting is presided over by a
Chairman
. The Chairman of the Board of Directorsshall preside as chairman at every general meeting. If he or she is ill/ unable to attend,then another director should act as chairman.
Resolutions
This is the method by which companies decide what they are going to do. When adecision has to be reached at a meeting the Chairman will ask the members to vote on aresolution. The type of resolution used will depend on the type of decision to be taken.There are 3 main types of resolutions. These are:
1. Ordinary Resolutions
An ordinary resolution can be passed by a simple majority of those voting i.e. 50% + 1.It should be noted that the rule is one vote per share, not one vote per person. Someoneholding 50% plus of the voting shares can therefore dictate what will be passed.Ordinary resolutions are used for the appointment and removal of directors. They are alsoused for the appointment and removal of auditors.
2. Special Resolutions
A special resolution is a resolution passed by at least three quarters of the members. Theyare normally used for reaching more significant decisions or carrying out significantchanges. They are used for:Alteration of the Articles of AssociationAlteration of the MemorandumChange of the company’s nameThere are some other types of resolutions that companies can use. These are usually used by
private
companies only. These are:
Written Resolutions
Under sections 281(2) and 283(2) of the Companies Act 2006, a private company canmake important decisions without a meeting if there is a resolution signed by either 50%3

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