326 Chapter 11Companies (2): Management, control and winding up
n A public company must hold an Annual General Meeting (AGM) of the members
within six months of the end of its financial year.
n At company meetings, ordinary resolutions are passed by a simple majority of members
who vote; special resolutions are passed by a 75 per cent majority of those who vote.
n A private company may pass any type of resolution as a written resolution, without
the need to hold a company meeting.Protection of minority shareholders
n A member alleging breach of director’s duties or unfair prejudice can bring a deriva-
tive claim on the company’s behalf.
n A member can petition the court for relief from unfair prejudice.
n A member can petition the court to wind the company up under the Insolvency Act
1986.
n The courts will protect a minority shareholder in three situations: fraud on the minor-
ity, if the personal rights of a member have been infringed, or as regards an act which
is ultra vires.The company secretary
n Every plc must have a company secretary. Private companies may choose to have one.
n The company secretary deals with the administration of the company and can make
contracts which bind the company, as long as the contracts were concerned with the
administration of the company.Winding up of companies
n When a company is wound up (or liquidated) it will cease to exist.
n If a company cannot pay its debts (which has a technical meaning) the court may order
that it be compulsorily wound up.
n The company members may themselves wind the company up. A special resolution
will be needed to do this.
n When a company is wound up the assets of the company are gathered in and then dis-
tributed in a certain order.Practice questions
1 Consider the following case.Regal (Hastings) Ltd vGulliver (1942) (House of Lords)Regal Ltd owned a cinema. It wanted to acquire two more cinemas so that it could sell all
three as a going concern. A subsidiary company was formed to make the purchase. The
sellers of the cinemas would not go ahead with the deal unless the subsidiary company had
at least £5,000 paid-up share capital. Regal could only provide £2,000 of the money which
the subsidiary needed. The directors of Regal therefore personally subscribed for a further
3,000 £1 shares in the subsidiary. At the conclusion of the whole business the shares in the