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WS5- shareholders and shares - Coggle Diagram

- - - - NOT to be passed by written resolutions and have to instead be by GM to allow representations: S288(2)(a) resolution removing a director before expiration of his period of office, and S288(2)(b) resolution removing an auditor before expiration of their term of office
- - - - Right to vote, right to receive dividend if one declared by directors, right to receive share of capital when wound up (surplus after creditors paid). Defined in S560(1) and show they are the default position on shares- they receive a fraction of dividend and have right to capital when wound up
    - - Dividends paid at a pre-determined rate in priority to any dividend paid on the ordinary shares (dividend can only be where company makes profit). Also often have right to priority over ordinary shareholders when capital returned in a winding up. Rights of preference shareholders to dividend may be cumulative or non-cumulative. Fixed means. Fixed preference shares have a fixed amount that is to go to them first as a priority. ‘participating’ means they also get a cut of the general dividends to go to the ordinary shares,, on top of your priority fixed preference dividend. Non-participating means they ONLY get their orioty fixed share- they don’t get a normal split of whatever is left over with the rest of the ordinary shares. You fix in reference to anything. It is often in reference to the amount you invested. E.g. invest 100,000 and have fixed 10% preference share- you get the first £10k in dividend
    - - this is when unpaid dividends roll over to the next year. If you have a cumulative preference fixed dividend. If you have 10% fixed priority to come back to you, and there is not enough money made to get a dividend, then it would cumulate to 40% to you first to account for last 3 years also
    - - only have a right to dividend/return of capital after the claims of the preference shareholders and the ordinary shareholders. Uncommon and would be by founders trying to attract investors
    - - temporary shares which may be bought back by the company at a specified date/event. Rules set out in S684-689
    - - shares which may be converted into a different type of share by a pre-arranged formula set out in company's articles
    - - companies may issue shares to their employees, often under employee's share scheme, are tax advantageous to the employee as opposed to usual income, usually have restrictions
  - - - class rights are not varied by issuing more shares of the same class, even though it may dilute the dividend. Substantive rights have not been changed, only the way they are enjoyed- White v Bristol Aeroplane Co. also Greenhalgh v Arderne Cinemas Ltd
    - - dissenting members if a class of shares can challenge a variation under S633(1) only shareholders holding at least 15% of the issued shares of that class may challenge a variation and (2) the variation must be challenged in court within 21 days of the date on which consent was given or the resolution was passed to vary the class rights
      - common law indicates a vote on resolution to vary clasd rights must be exercised for the purpose, or dominant purpose of benefitting the class as a whole, so this may be a ground of challenge- British America Nickel Corpn Ltd v O'Brien
- - - - shareholders can enforce terms of articles against the company, company is also entitled to enforce and restrain breaches of articles against members
      - Wood v Odessa Waterworks- court stopped shareholders passing a resolution which was inconsistent with their articles
      - Pender v lushington- where individual member's rights infringed, that member may bring a personal claim to enforce those rights even where the conduct complained of may also constitute a wrong to the company itself
      - a member may sue another member on the contract created by the articles without joining the company as a party- Rayfield v Hands
    - - terms can only be implied where necessary for proper construction of articles- Equitable Life Assurance Society v Hyman
    - - Sugarman v CJS Investments- they interpret literally even if leads to absurdity
  - - - normal contractual rules apply- can only be altered if all shareholders agree
      - provisions may be enforceable by injunction
      - it's a private agreement, whereas articles are registered at companies house
      - though they cannot fetter their statutory powers, they can put in shareholder agreement they will not support a certain resolution- Russell v Northern Bank Development Corp (this will be binding on shareholders but not company itself)
    - - no shareholder will vote in support of alteration in companies articles unless all agree, each shareholder entitled to appoint a director, no shareholder will vote to remove a director unless all agree, except in specified circumstances no shareholder will require the repayment of money lent to the company