306 Chapter 11Companies (2): Management, control and winding up
dividend recommended or reduce it. If the members are unhappy with the dividend
recommended they might consider removing the directors at a future meeting.
Section 302 provides that the directors have the power to call a general meeting of the
company. Generally, it will be the directors who do call meetings. However, the members
may require the directors to call a general meeting of the company under s. 303. Section
303(2) provides that the directors are required to call a general meeting once they have
received requests to do so from members holding at least 10 per cent of paid-up shares
which carry voting rights. As regards private companies only, this figure is reduced to 5 per
cent if more than 12 months have passed since the last meeting at which the members had
the right to circulate a resolution. The members’ request, which can be made electronically,
must state the general nature of the business to be dealt with at the meeting and may
include the text of a resolution to be proposed and voted upon at the meeting.
If the directors are required to hold a meeting under s. 303 then s. 304 requires them to
call the meeting within 21 days of receiving the request. The meeting must actually be held
within 28 days of the notice convening the meeting. If the request for the meeting contained
a proposed resolution, notice of the meeting must contain notice of the resolution.
If the directors are requested under s. 303 to call a meeting, but do not do so in accordance
with s. 304, then s. 305 allows the members who requested the meeting, or any of them hold-
ing at least half of the relevant voting rights, to call a meeting at the company’s expense.Conduct of meetings
A member who does not attend a meeting can ask a proxyto attend and vote instead. The
proxy does not need to be a company member. A meeting must have a quorum (set min-
imum number) of members. In all but single member companies the quorum will be set at
two members, unless the articles provide otherwise. This means that if only one member
turns up to the meeting it will be inquorate and therefore invalid. Proxies do count towards
a quorum. A meeting needs to be quorate only at its commencement. Once the meeting has
begun the number present may fall below the quorum. There must be a chairman to preside
over the meeting. The chairman’s job is to ensure that the meeting follows the procedure
set out in the agenda. Often the articles, like the Model Articles for both Public and Private
Companies, give the chairman the casting vote if the votes of the members are tied.Voting
Usually a vote is taken by a show of hands. Each member has one vote, regardless of how
many shares he or she holds. However, any member has the right to demand a poll. If this
is done, each voting share will carry the voting rights conferred on it by the articles.
Generally, matters which are not contentious are voted on by a show of hands. When a
matter is contentious some members are likely to insist on a poll. A member can insist on a
poll either before the vote on a show of hands or when the outcome of the vote on a show
of hands is declared.Example
Ace Ltd has one class of shares, each share carrying one vote. X holds 55 of these shares,
Y holds 30 and Z holds 15. An ordinary resolution is proposed at the AGM of Ace Ltd. On a
show of hands X votes in favour of the resolution. Y and Z vote against it. X was outvoted
on the show of hands, but can demand a poll where all of the shares will carry one vote each.
X then outvotes Y and Z by 55 votes to 45 and so the resolution is passed.