Please enable JavaScript.

Coggle requires JavaScript to display documents.

Company Law (Shares (Nature of Share (A contract – constitution (Article…

- - - - Article of Association
        
        Altering the articles
        
        s.21 of CA 2006– special resolution (75%) at the general meeting
        
        Common Law Supplementary: members must exercise votes bona fidie and for proper purpose of company interest as a whole (or generally for the purpose that the power granted)
        vs.
        shuttleworth：the test is only "good faith", as there is no objective standard to judge what is "for the interest of company" by the judges
        
        决议的结果法院不会干涉
        
        class right
        
        1 more item...
        
        强制卖股票
        
        3 more items...
        
        Class of Shares
        
        How to determine if it is a class right?
        
        Cumbrian Newspapers Group Ltd v Cumberland and Westmoreland Herald Newspapers and Printing Co Ltd [1987]
        
        Facts: provisions in the articles gave the claimant a pre-emptive right over the transfer of shares in the defendant company and the right to nominate a director to its board as long as it held 10 per cent of the ordinary shares
        
        Scott J stated that rights or benefits conferred by a company’s articles of association can be classified into three distinct categories.
        1.Rights or benefits which are annexed to particular shares such as dividend rights, and rights to participate in surplus assets on a winding-up. Where the articles provide that particular shares carry particular rights, these are class rights for the purposes of section 125 CA 1985.
        2.Rights or benefits that, although contained in the articles, are conferred on individuals not qua members or shareholders but, for ulterior reasons, are connected with the administration of the company’s affairs.
        3.Rights or benefits that, although not attached to any particular shares, are conferred on the beneficiary in his capacity as member or shareholder in the company
        
        Re National Telephone Co [1914] 1 Ch 755
        
        Restrictive rules of construction. it is presumed that any rights attached to a share are exhaustive:
        
        What amounts to a variation or abrogation of class rights?
        
        conduct which impacts upon the substance of a shareholder’s class right vs. conduct which merely affects its exercise or enjoyment. :!:
        
        White v Bristol Aeroplane Co Ltd [1953]
        
        优先股和普通股都增发，优先股股东认为投票权被影响，主张这是variation of class right. Court of Appeal rejected。it was the effectiveness of exercising those rights that had been affected, not the rights themselves.
        
        Re Old Silkstone Collieries Ltd [1954]
        
        公司煤矿被国有化，政府对所有股东有补偿。在敲定补偿计划的过程中，公司两次收购优先股股本，这两次公司皆承诺公司不会全部买进优先股因而优先股股东可以享受政府补偿。但是第三次公司要全部买断优先股，这样的结果就是全部取消了优先股。The Court of Appeal held that the proposal amounted to an unfair variation of class rights. The preference shareholders had been promised that they would participate in the compensation scheme.
        :warning:However, note that a cancellation of a class of shares on a reduction of capital will not generally be considered to constitute a variation of class rights. Such a course of action is viewed as consistent with the terms of issue of the particular shares in question. See: House of Fraser plc v ACGE Investments Ltd [1987] BCLC 293. Re Saltdean Estate Co Ltd [1968] 3 All ER 829. :warning:
        
        statutory procedure for a variation of class rights
        
        s.630 CA 2006.
        class rights may only be varied:
        
        in accordance with the relevant provisions in the company’s articles, or
        
        if no such provision is made in the articles, 75% consent from the class share holders in writing or by special resolution (passed at a separate meeting of the holders of such shares).
        s.637 and s. 640
        The company must notify the Registrar of any variation of class rights within one month of the date on which the variation is made.
        
        the company’s articles may specify either less or more than 75% consent.
        if >75% and the company has provision in the article for the entrenchment of those rights (s.22 CA 2006), the entrenched class rights cannot be varied under s.630. i.e. cannot change even with >75% consent?? Check.
        
        British America Nickel Corpn v MJ O’Brien Ltd [1927]
        
        the power given must be exercised for the purpose of benefiting the class as a whole, and not merely individual members only.
        
        Minority right to objection to a variation
        
        s. 633 provides that minority class shareholders may apply to the court within 21 days of the resolution to have it cancelled.
        The effect of such an application is to suspend the variation until it is confirmed by the court (s.633(3)).
        
        Model Article:
        
        Member’s organ/general meeting:
        
        voting at the meeting (arts. 43–48 private, 34–40 public).
        
        s.336 CA 2006 –
        Private company: general meeting is not compulsory, unless the company wished to have one.
        Public company: compulsory to have Annual general meeting.
        
        the organisation of meetings (arts. 38–42 private, 28–33 public)
        
        Management organ/board of directors:
        
        directors’ appointment (arts. 17–20 private, 20–24 public)
        
        decision-making by directors (arts. 7–16 private, 7–19 public).
        
        the allocation of management power to the board (arts. 3–6 private and public, art30 private/art 70 public)
        
        Directors’ general authority
        
        Subject to the articles, the directors are responsible for the management of the company’s business, for which purpose they may exercise all the powers of the company.
        Shareholders’ reserve power
        
        – (1) The shareholders may, by special resolution, direct the directors to take, or refrain from taking, specified action. No such special resolution invalidates anything which the directors have done before the passing of the resolution
        
        the articles also allocate to the board, in arts. 30 (private) and 70 (public), the power to decide whether to distribute any surplus profits to the shareholders in the form of dividends.
        
        the articles do not provide for the general removal of directors except in the case of incapacity or resignation (arts.18 private and 22 public). Direct removal is covered by s.168 CA 2006, which gives members the right by simple majority (>50%) to remove a director for any reason whatsoever :!!:
        
        Howard Smith Ltd v Ampol Petroleum Ltd [1974]
        
        Lord Wilberforce stated: it is established that directors, within their management powers, may take decisions against the wishes of the majority of shareholders, and indeed that the majority of shareholders cannot control them in the exercise of these powers while they remain in office.
        
        s.33 CA2006
        
        Article of Association is contract of member v member and member v company
        
        A strange contract
        
        The contract can be varied by special resolution, which means that it is not necessary to have the consent of all the parties to it.
        
        :warning: vs. shareholder agreement which needs consents of all members to the contract
        
        Only enforceable by individuals qua members :!!: conflicting cases
        
        Quin & Axtens Ltd v Salmon [1909]
        
        1 more item...
        
        Eley v Positive Government Security Life Assurance Co (1875–76)
        
        1 more item...
        
        The contract also binds future members
        
        :warning:vs. shareholders agreement which is on the doctrine of privity
        
        Contract of member v member? – conflicting case law.
        
        Welton v Saffery [1897]
        
        Lord herschell - no contract between the individual members of the company … Such rights can only be enforced by or against a member through the company
        
        Rayfield v Hands [1960]
        
        Article要求member要卖股票的话，director(also a member) 必须买。Court认为The court considered there was a contract inter se which was directly enforceable by one member against another, and so the directors as members were bound to buy the shares.
        
        Contract of member v company
        
        contradicting cases:
        
        MacDougall v Gardiner (1875–76)
        
        1 more item...
        
        Pender v Lushington (1877)
        
        1 more item...
      - Shareholders’ agreements
        
        Company cannot contract out statutory rights: i.e. right to increase capital, right to alter article, right to remove director etc.
        
        loopholes: :!!: :warning:
        
        Bind all individual members, although cannot bind the company
        
        Russell v Northern Bank Development Corporation [1992]
        
        in a shareholders’ agreement (company is a party to contract), 除非全员同意，否则公司不能发股票增资。但是公司这样做了。一个股东不同意。The House of Lords held that 条款与CA 1985 s.121（increase capital）相抵触。对于公司法人无效，但是条款依然对其他member(自然人)有效.
        
        1 more item...
        
        Weighted voting right
        
        Bushell v Faith [1970]
        
        Article (注意不是Shareholders’ agreement) 写如果有决议remove director, that director’s shares (in his capacity as the shareholder) 就乘以3.结果就是director可以控制结果。其他股东上诉认为这和s.168 CA 2006 (right to to remove director, in 1970 it was s.184 CA 1948) 相抵触。The House of Lords found 认为直接写不能remove director是抵触，但是投票乘以3不抵触。The statute only specified the type of resolution needed to remove a director, i.e. a general resolution. It was completely silent on how the company allocated voting rights for such resolutions.
        
        Attaching "class right"
        
        Citco Banking Corporation NV v Pusser's Ltd [2007] Privy councel
        
        公司需要资金。资方要求必须保留director, article把director 1 vote per share改成50 votes per share. Good faith of the change was not challenged. 法院支持改动。
        
        Entrenching rights in Article as per s.22 CA 2006 (the law is not in force)
    - - Shareholder does not own corporate assets (Macaura v Northern Assurance Co Ltd [1925]) vs. Partners in a partnership own corporate assets :warning: