Minority Shareholders Notes

Minority shareholders 1) Actions by minority shareholders exercising their voting rights What is the capacity of the minority shareholders? Voting on a show of hands Shareholder only Will only be able to exercise power at general meetings Directors and shareholders Will be able to exercise power at both general meetings and board meetings What is their voting power as minority shareholders together on a show of hands? 2 votes out of 10 4 votes out of 10 Could the minority shareholders block resolutions at general meetings on a show of hands? If have 50% or over on show of hands can block ordinary resolution If have over 26% or over on show of hands can block a special resolution Right to demand a poll Model Article 44 and s.321(2)(b) Voting on a poll What is their voting power as m minority shareholders together on a poll? Below 25% Above 25% Could the minority shareholders block resolutions at general meetings on a poll? If have 50% or over on show of hands can block ordinary resolution If have over 26% or over on show of hands can block a special resolution Apply to the facts of the question. Which proposed resolutions, transactions or meeting notices can the minority shareholders block? * * e.g. Block special resolution to amend articles of association e.g. Stop general meetings being held on short notice 2) Shareholder membership rights - s.33 CA 2006 What action can a shareholder pursue / what is this action? Can sue for damages under s.33 CA if their membership rights have been infringed What are membership rights? (examples) 1) Right to a dividend once it has been lawfully declared 2) Right to share in surplus capital on winding up 3) Right to receive notice of general meetings 4) Right to vote at general meetings What type of rights are these? 1) These are rights which govern the business relationship between the company and the shareholder 2) Personal rights are unenforceable * Ely v Positive Government Life Assurance - A right to be the company's solicitor was unenforceable through s.33 as it was not a membership right Where should non-membership rights be recorded? In a separate contract / shareholders agreement and not in the articles of association 

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