Lecture 9: Company Law III : Meetings, Shareholder Protection & Liquidation

Shareholder Meetings

Gatherings where shareholders and directors convene to discuss and vote on matters affecting the company, including General Meetings, Annual General Meetings (AGMs), and Class Meetings.

Shareholder Resolutions

Decisions made by shareholders, which can be ordinary (simple majority) or special (at least 75%), required for various matters like regular decisions, major changes, or specific issues proposed by shareholders.

Resolution in Meeting vs

Resolution in a Meeting is passed during a physical or virtual gathering, while Resolution by Circulation is passed through written agreement, excluding certain decisions, with specified time frames and majority requirements.

General Meetings

Gatherings where all shareholders and directors discuss and vote on company matters, enabling shareholder participation, decision-making, and transparency.

Annual General Meetings (AGMs)

Meetings held annually by public companies within six months of the financial year end, involving crucial business like financial reports, dividend declarations, and director/auditor appointments.

Class Meetings

Gatherings for specific class shareholders to vote on matters affecting their class, ensuring their interests are addressed separately from other shareholders.

Voting

Process conducted by show of hands or poll during shareholder meetings, with each method having different voting rules and implications.

Minority Shareholders' Protection

Safeguards for minority shareholders, including statutory derivative claims, protection against unfair prejudice, control over resolutions, and exceptions to majority decisions.

Foss v Harbottle Case

Established the principle that the company should take legal action when wronged, leading to statutory provisions protecting minority shareholders and allowing derivative claims.

Derivative Claims

Legal actions allowing shareholders to sue on behalf of the company against directors for negligence, breach of duty, or breach of trust, even if the director did not personally benefit.

Unfair Prejudice

Occurs when a company's affairs unfairly prejudice shareholders generally or a specific group, not necessarily illegal, shareholders can petition the court.

Derivative Claims

Involves two stages of permission - court permission to bring the claim and court decision on claim continuation based on evidence.

Insider Dealing

Criminal offense using non-public, price-sensitive information for personal gain, to maintain stock exchange reliability.

Market Abuse

Improper conduct in financial markets like insider dealing, market manipulation, prohibited to maintain market integrity.

Winding Up and Liquidation

Process of ending a company, selling assets to pay debts, surplus to shareholders, can be compulsory or voluntary.

Compulsory Liquidation

Initiated by court order, involves appointing a liquidator, debt collection, and distribution, leading to company termination.

Voluntary Winding Up

Initiated by shareholders without a court order, can be members' voluntary winding up or creditors' voluntary winding up.

Liquidator's Role

Responsible for collecting assets, paying creditors, selling property, and distributing surplus money, appointed in winding up.

Distribution Priority

Order of distributing assets in winding up - secured creditors, winding up costs, preferential creditors, etc., ending with shareholders.

Wrongful and Fraudulent Trading

Wrongful trading occurs when directors continue trading with no prospect of avoiding insolvency, fraudulent trading involves carrying on business to defraud creditors.

Administration

Mechanism to save financially struggling companies, appoints an administrator to rescue the company and protect it from creditors, with the twofold purpose of rescuing the company and achieving a better result for creditors.