UNIVERSITY OF TECHNOLOGY, JAMAICA

COMPANY LAW

UNIT 6: MEETINGS AND RESOLUTIONS

We will be looking at:

 The main organs of a company;

 Who are empowered to make decisions about the company’s affairs; and
 How those decisions are taken.

See chapter 15 – Andrew Burgess, Commonwealth Company Law

Definitions

General Meeting – meeting of the members of a company.

General Meeting/Company in general meeting/ Shareholders in general meeting – all

refer to shareholders collectively.

The division of power: board of directors and general meetings

The key organs of governance of a company are the board of directors and the shareholders. As
a governing organ/body of the company, the shareholders are often referred to as the
shareholders in general meeting (the description is more appropriate for a public company).

For many years the board of directors were subservient to a general meeting. Should a board
embark on a course of action disliked by shareholders then they were able to call a company
meeting and if the protest was sufficiently strong, pass a resolution that would instruct the
directors to change their direction. This model while relevant to the nineteenth century,
increasing became redundant in respect of the evolution of the large scale modern company.

Gramophone and Typewriter Ltd v Stanley (1908) - The directors are not servants to obey
directions given by the shareholders as individuals; they are not agents appointed by and bound
to serve the shareholders as their principals, they are persons who may by the regulations be
entrusted with the control of the business, and if so entrusted they can be disposed from the
control only by the statutory majority which can alter the articles.
This reorientation can be traced to Automatic Self Cleansing Filter Syndicate Ltd v
Cunninghame (1906) where the Court of Appeal held that: for the company in meeting to
interfere with the directors’ decision then a majority will have to pass an extraordinary resolution
to alter the articles and by doing so to limit the directors’ authority.

There has been a line of judicial decisions that support Automatic Self –Cleansing Filter and it is
now firmly established that a general meeting had no right to interfere with the managerial
function delegated to the directors and exercised by them through properly constituted meeting.
Should the company, in a general meeting, wish to have more control of the board then it may
do so through alteration of the articles. Until alteration of the articles takes place directors retain
their managerial discretion.

Therefore, attempts by shareholders to usurp board powers by passing ordinary resolutions or

acting in any manner inconsistently with the articles will not succeed. The board of directors
is therefore the principal organ of management of the company.

The power of the board is subject to the articles and the Companies Act.

The decision whether or not a company should commence legal action in given circumstances is
part of the general management of the company so will ordinarily be vested in the board of
directors. This was confirmed in Breckland Group Holdings Ltd. v London and Suffolk
Properties Ltd. (1989) – The judge restrained the majority shareholder from taking any
further action in litigation commenced by the shareholder without the authority of the board until
a board meeting could be held at which it could be resolved whether to continue or discontinue
the legal action.

Shareholders

The role of shareholders in the governance of any given company is established by a

combination of:

1. Constitutional rules of the company (articles of incorporation);

2. Statute law (Companies Act);
3. Cases recognising the power of the shareholders in certain circumstances.
Shareholders are sometimes referred to as ‘residual controllers’ of the company. Four main
points support this:

1. The law requires certain fundamental decisions to be made by the shareholders (e.g. to
amend the company’s constitution);
2. Whilst the articles normally entrust management to the board they also reserve a right for
shareholders to direct the board by special resolution on any specified matter,
3. If the board is unable to act, power will revert to the shareholder;
Barron v Potter (1914) – “if directors having certain powers are unable and unwilling to
exercise them...there must be some power in the company to do itself that which under
other circumstances would be otherwise done... in my opinion, the company in general
meeting has power to make the appointment”.
4. Shareholders have the right to remove directors from office.

General Meetings

 Meetings are a crucial part of the management of a company.

 Meetings enable the shareholders to know the ongoing proceedings of the company and
allow them to deliberate on certain issues.
 Meetings are an important mechanism for shareholders to exert control in corporate
decision-making and an opportunity for ensuring the accountability of directors to the
shareholders.
 Shareholders make decisions by passing resolutions at general meetings.

Types of Meetings

1. Annual General Meeting (AGM) - section 126

Section 126 (1) - Every company shall in each year hold a general meeting as its annual
general meeting in addition to any other meetings in that year, and shall specify the meeting as
such in the notices calling it; and not more than fifteen months shall elapse between the date of
one annual general meeting of a company and that of the next.

With newly created companies the first AGM may be held within 18 months and it need not,
therefore hold it in the year of incorporation or in the following year.
Section 126 (2) - If a company fails to hold an AGM then a member can make an application to
the Minister who may order that one be held as well as, if need requires, set the quorum of
members who must be present.

Section 126 (5) - If default is made in-

(a) holding a meeting of the company in accordance with subsection (1); or
(b) complying with any directions of the Minister under subsection (2);
(c) complying with subsection (4),
the company and every officer of the company who is in default shall be liable to a fine not
exceeding fifty thousand dollars.

Importance of AGM

 Consideration of accounts, balance sheet and reports of the board of directors and
auditors.
 Shareholders can take decisions relating to business
 Declaration of dividends
 Appointment of directors

Statutory Meeting – section 127

This is the first meeting of the shareholders of the company and held only once in the lifetime of
the company.

Section 127 (1) - Every company limited by shares and every company limited by guarantee
and having a share capital shall, within a period of not less than one month nor more than three
months from the date at which the company is entitled to commence business, hold a general
meeting of the members of the company, which shall be called "the statutory meeting".

(2) The directors shall, at least seven days before the day on which the meeting is held, forward
a report (in this Act referred to as "the statutory report") to every member of the company.
(3) The statutory report shall be certified by not less than two directors of the company or
where there are less than two directors, by the sole director and shall state-
(a) the total number of shares allotted, distinguishing shares allotted as wholly or partly paid up
otherwise than in cash, and stating in the case of shares partly paid up the extent to which they
are so paid up, and in either case, the consideration for which they have been allotted;
(b) the total amount of cash received by the company in respect of all the shares allotted,
distinguished as aforesaid;
(c) an abstract of the receipts of the company and of the payments made thereout, up to a date
within seven days of the date of the report, exhibiting under distinctive headings the receipts of
the company from shares and debentures and other sources, the payments made thereout, and
particulars concerning the balance remaining in hand, and an account or estimate of the
preliminary expenses of the company;
(d) the names, addresses and descriptions of the directors, auditors, if any, managers, if any,
and secretary of the company; and
(e) the particulars of any contract the modification of which is to be submitted to the meeting for
its
approval, together with the particulars of the modification or proposed modification.
(4) The statutory report shall, so far as it relates to the shares allotted by the company, and to
the cash received in respect of such shares, and to the receipts and payments of the company
on capital account, be certified as correct by the auditors, if any, of the company.
(5) The directors shall cause a copy of the statutory report, certified as required by this section,
to be delivered to the Registrar for registration forthwith after the sending thereof to the
members of the company.
(6) The directors shall cause a list showing the names, descriptions and addresses of the
members of the company, and the number of shares held by them respectively, to be produced
at the commencement of the meeting and to remain open and accessible to any member of the
company during the continuance of the meeting.
(7) The members of the company present at the meeting shall be at liberty to discuss any
matter relating to the formation of the company, or arising out of the statutory report, whether
previous notice has been given or not, but no resolution of which notice has not been given in
accordance with the articles may be passed.
(8) The meeting may adjourn from time to time, and at any adjourned meeting any resolution
of which notice has been given in accordance with the articles, either before or subsequent to
the former meeting, may be passed, and the adjourned meeting shall have the same powers as
an original meeting.
(9) In the event of any default in complying with the provisions of this section, every director of
the company who is knowingly and wilfully guilty of the default or, in the case of default by the
company, every officer of the company who is in default shall be liable to a fine not exceeding
fifty thousand dollars.
(10) This section shall not apply to a private company.
Extraordinary general meeting (EGM) – section 128

This meeting is called to decide upon a serious issue that cannot be delayed to the next annual
meeting.

The board of directors on their own or on the request of members can call meeting.

Section 128- (1) The directors of a company, notwithstanding anything in its articles, shall on
the requisition of members of the company holding, at the date of the deposit of the requisition,
not less than one-tenth of such of the paid up capital of the company, as at the date of the
deposit, which carries the right of voting at general meetings of the company, or, in the case of
a company not having a share capital, members of the company representing not less than one-
tenth of the total voting rights of all the members having at that date a right to vote at general
meetings of the company, forthwith proceed duly to convene an extraordinary general meeting
of the company.
(2) The requisition shall state the objects of the meeting, and shall be signed by the
requisitionists and deposited at the registered office of the company, and may consist of several
documents in like form, each signed by one or more requisitionists.
(3) If the directors do not within twenty-one days from the date of the deposit of the requisition
proceed duly to convene a meeting, the requisitionists, or any of them representing more than
one-half of the total voting rights of all of them, may themselves convene a meeting, but any
meeting so convened shall not be held after the expiration of three months from that date.
(4) A meeting convened under this section by the requisitionists shall be convened in the same
manner, as nearly as possible, as that in which meetings are to be convened by directors.
(5) Any reasonable expenses incurred by the requisitionists by reason of the failure of the
directors duly to
convene a meeting shall be repaid to the requisitionists by the company, and any sum so repaid
shall be retained by the company out of any sums due or to become due from the company by
way of fees or other remuneration in respect of their services to such of the directors as were in
default.
(6) For the purposes of this section the directors shall, in the case of a meeting at which a
resolution is to be proposed as a special resolution, be deemed not to have duly convened the
meeting if they do not give such notice thereof as required by section 138.
Class Meetings

Meetings of holders of a particular class of shares are called class meetings. The holders of other
classes of shares have no right to attend. Such meetings may be necessary, for example, to
consider a proposed variation of class rights. The articles should contain terms governing the
calling of class meetings and in general they are essentially the same as for general meetings.

Court Ordered Meetings

Section 130 (2) If for any reason it is impracticable to call a meeting of a company in any
manner in which meetings of that company may be called, or to conduct the meeting of the
company in a manner prescribed in the company's articles, the Court may, either of its own
motion or on the application of any director of the company or of any member of the company
who would be entitled to vote at the meeting, order a meeting of the company to be called, held
and conducted in such manner as the Court thinks fit, and where any such order is made may
give such ancillary or consequential directions as it thinks expedient, and any meeting called,
held and conducted in accordance with any such order shall for all purposes be deemed to be a
meeting of the company duly called, held and conducted.
Re El Sombrero Ltd (1958)
X and Y were directors each owning 5% of the shares with the remaining 90% held by Z who
was not a director. Under the articles the quorum for a meeting was 2 shareholders. Wishing to
remove X and Y from the directorships Z called a meeting but X and Y refused to attend so that
no quorum was possible. Subsequently Z applied to the court for assistance, which was granted
whereby a meeting had to take place and that the quorum need only be 1 shareholder. X and Y
were both removed from office.
See also Re British Union for the Abolition of Vivisection (1995)
However, a court will not order a meeting to be held if it will override a class rights contained in
a shareholders’ agreement – Harmon v BML Group Ltd (1994)
Formalities for a valid meeting

For a company meeting to function legally and efficiently several important technicalities need to
be satisfied.

Notice of Meetings - section 129

The period of notice required for meetings varies according to the type of meeting concerned. In
the case of the annual general meeting, 21 days’ notice is required. In the case of other
meetings, a period of seven days is required if the company is an unlimited company and 14
days’ notice if the company is limited. If a special resolution is to be proposed, then 21 days’
notice is required. If an extraordinary resolution is to be proposed, 14 days’ notice is required if
the company is limited and seven days’ notice if it is unlimited.
‘Days’ notice’ means clear days, that is, exclusive of the day of service and of the day of the
meeting. Also, the notice must be in writing.
Any provisions of a company’s articles shall be void in so far as it provides for the calling of a
meeting of a company by a shorter notice.

Provided that a meeting of the company shall, notwithstanding that it is called by shorter notice
than that specified in the article, be deemed to have been duly called if it is so agreed –
(a) In the case of a meeting called as the AGM, by all the members entitled to attend and vote
thereat; and
(b) in the case of any other meeting, by a majority in number of the members having a right to
attend and vote at the meeting, being a majority together holding not less than ninety-five per
centum of the shares giving that right.

Contents of the notice: the notice shall specify the place, the day and the hour of meeting
and, in case of special business, the general nature of that business. The notice should also state
whether the meeting is an annual general meeting or extraordinary general meeting.
If a special or extraordinary resolution is to be tabled then the full text of it must be provided
with the notice. If subsequently at the meeting an amendment to the special or extraordinary
resolution is proposed then all shareholders (including those not in attendance) must agree to
waive their right to notice of it.
Therefore, the notice shall state:

i. the time and place of meeting,

ii. the general nature of the business of the meeting,

iii. the resolution(s) to be passed,

 iv. the purpose of the meeting (so that the members may make up their mind whether to
attend or not to attend),

v. the notice of a general meeting at which a special resolution or an extraordinary

resolution is to be proposed must specify the intention to propose such resolution.

The proposed resolution set out in the notice and the eventual resolution passed must be identical.
Otherwise the resolution is invalid. Grammatical or clerical changes or use of a more formal
language would not invalidate a resolution.

Re Moorgate Mercantile Holdings Ltd (1980) –See recommendations by Slade J.

The case illustrates the strict application of the rule that a resolution put before a company
meeting must comply precisely with that set out in the notice. The articles of association of
Moorgate Mercantile Holdings Ltd. empowered the company, by special resolution, to reduce its
share premium account. On April 2, 1979, the secretary of the company sent a notice to the
company's members informing them that an extraordinary general meeting of the company
would be held on April 26, 1979 at which a special resolution would be proposed that the share
premium account of the company amounting to 1,356,900 be cancelled. In the case, the court
took the view that the resolution had not been validly passed in accordance with section 141(2)
because it differed not merely in form but also in substance from the one set out in the notice of
April 2 and the members of the company had not agreed to waive their rights as to notice.
Therefore the court had no jurisdiction to confirm the reduction of the share premium account
and the petition would be dismissed.

Kaye v London Tramways Co (1898) - meeting was held to be invalid because the notice was
inadequate. The case involved a provisional agreement for sale of an undertaking by one
company to another. The notice of meeting set out a resolution to approve the sale of the
company’s business but it did not disclose that under the sale agreements the directors were to be
paid large amounts as compensation. It was held that notice did not properly disclose the nature
of the business to be done at the meeting. The resolution was therefore declared invalid.

Members’ Resolution and Circulars

Section 135(1) - Any member who is entitled to attend and vote at an AGM may request to
have included in the notice of that AGM any resolution which may properly be moved and is
intended to be moved at that meeting. The request must be in writing and the resolution must
not be more than 500 words.
Where a member’s request for the inclusion of the resolution is made, the company is not
obligated to give notice of the resolution unless the written request, signed by the member or
members concerned, together with the resolution are deposited at the registered office of the
company not less than 6 weeks before the meeting. However, if after the resolution has been
deposited, and AGM is called for a date 6 weeks or less thereafter, the resolution is deemed to
have been properly laid.

Service of Notice
Section 130 - Notice shall be given in manner hereinafter mentioned or in such other manner if
any, as may be prescribed by the company in general meeting, to such persons as are, under
the regulations of the company, entitled to receive such notices from the company (to all
shareholders unless the articles say otherwise).
The accidental omission to give notice of a meeting to, or the non receipt of notice of a meeting
by, any person entitled to receive notice shall not invalidate the proceedings at that meeting.
However, if it is found that a shareholder was deliberately denied notice of a meeting then this
would invalidate that meeting (Royal Mutual Benefit Society v Sharman).

Quorum – section 130

A quorum is the minimum number of shareholders with voting rights who have to be present for
the general meeting to commence and for the decisions subsequently made to be valid. In the
case of a private company 2 members, and the in the case of any other company, 3 members
personally present shall be a quorum.

At common law, a meeting must be made up of more than one person. In Sharp v Dawes
(1876), a meeting of a stannary mining company governed under the Stannaries Acts (which
governed tin mining companies set up in Cornwall) was called for the purpose of making a call
on shares. Only one member, Silversides, turned up at the meeting together with the company
secretary who was not a member. Lord Coleridge CJ said in the Court of Appeal ‘… the word
“meeting” prima facie means a coming together of more than one person’. The court held that
there was no meeting here. Lord Coleridge CJ did acknowledge that on occasion the word
‘meeting’ could have a different meeting but found there was nothing here to indicate that that
was the case.
In other territories like Jamaica that provide that one or more persons may incorporate a
company (section 3 (1)) have displaced the common rule in Sharp v Dawes and allow a
shareholder present in person or by proxy to constitute a meeting (re: one person company).
However, the Jamaican Act does not have any specific provisions on what constitutes a quorum
in such companies. Presumably, the Act will be interpreted to allow a quorum of the shareholder
present on the basis that Parliament could not have intended anything else (Burgess, 2013)

The Act does not regulate the quorum during the meeting. The rules regulating the quorum
during the meeting are found in the articles of incorporation (Art 60 of Table A, 1 st Sch).

Voting – sections 132 & 133

At a general meeting a resolution put to the vote of the meeting shall be decided on a show of
hands unless a poll is demanded. A vote of show of hands is usually conclusive of the matter.

Each shareholder when present at a company meeting on a show of hands is to have one vote
irrespective of how many shares are held, and on a poll one vote for each share held.

The chairman

The chairman, if any, of the board of directors shall preside as chairman at every general
meeting of the company, or if there is no such chairman, or if he shall not be present within 15
minutes after the time appointed for the holding of the meeting or is unwilling to act the
directors present shall elect one of their number to be chairman of the meeting.

If at the meeting no director is willing to act as chairman or if no director is present within 15

minutes after the time appointed for holding the meeting, the members present shall choose one
of their number to be chairman of the meeting.

The chairman’s duties are owed to the meeting and not to the directors; he acts as chairman of
the meeting, not as chairman of the board of directors. He must act impartially and his
fundamental duties are to preserve order, to ensure that the business of the meeting is
conducted in a proper and efficient manner and in accordance with the law and the company’s
articles, to ensure that all opinions are given fair hearing as far as practicable, to accept all
legitimate resolutions and amendments and to ascertain the view of the meeting on the
questions under consideration.

When adjourning a meeting the chairman must act in good faith. In John v Rees (1970) the
chairman of a company meeting was held to have acted responsibly on adjourning the meeting
when disorder made it impossible to conduct business or to arrange through the meeting an
agreed adjournment.

Should a chairman, without just cause, prematurely close a meeting then another chairman may
be elected so that the meeting may continue.

National Dwellings Society v Sykes (1894)

At a general meeting the chairman proposed that the accounts be passed. A shareholder moved
an amendment that a committee of inquiry be appointed to investigate the accounts. The
chairman refused to take the amendment. He again put the unamended resolution and on it
being lost immediately closed the meeting. The shareholders present then appointed a new
chairman and a committee of inquiry. Held: the appointments were valid.

Proxies – section 131

131.—(1) Any member of a company entitled to attend and vote at a meeting of the company
shall be entitled to appoint another person (whether a member or not) as his proxy to attend
and vote instead of him, and a proxy appointed to attend and vote instead of a member (or,
where more than one proxy has been so appointed, one of their number named by the member
for the purpose) shall also have the same right as the member to speak at the meeting:
Provided that, unless the articles otherwise provide—
(a) this subsection shall not apply in the case of a company not having a share capital; and
(b) a member shall not be entitled to appoint more than one proxy to attend on the same
occasion; and
(c) a proxy shall not be entitled to vote except on a poll.
(2) In every notice calling a meeting of a company having a share capital there shall appear with
reasonable prominence a statement that a member entitled to attend and vote is entitled to
appoint a proxy to attend and vote instead of him, and that a proxy need not also be a member
and if default is made in complying with this subsection as respects any meeting, every officer of
the company who is in default shall be liable to a fine not exceeding fifty thousand dollars.
Resolutions

Business put before a general meeting will be in the form of resolutions of which there are
several types. Resolutions mean decisions taken at a meeting. A motion with or without
amendments is put to a vote at a meeting. Once the motion is passed, it becomes a resolution.
A valid resolution can be passed at a properly convened meeting with the required quorum.

Ordinary Resolution

Unless the Act or articles specify that a special resolution is required, wherever the approval of
shareholders is required an ordinary resolution will suffice.

For the motion to become a resolution a simple majority in favour of shareholders, personally
present or represented by proxy, of those entitled to vote and actually voting is needed.

Where an ordinary resolution is required it will be determined by legislation or the articles. E.g.
the removal of a director (section 179) or auditor

Special Resolutions – section 138 (2)

For a motion to become a special resolution a three-quarters majority in favour of shareholders,

personally present or represented by proxy, of those entitled to vote and actually voting is
needed at a general meeting of which notice has been given specifying the intention to propose
the resolution as a special resolution. There must have been at least 21 days’ notice. Provided
that, if ninety-five per centum of the members entitled to attend and vote at any such meeting
so agree, a resolution may be proposed and passed as a special resolution at a meeting of which
less than twenty-one days' notice has been given.
Special resolutions are required for in respect of fundamental changes to the company. E.g. to
alter the articles of incorporation

A copy of every special resolution must be sent for filing to the Registrar within fifteen days of
passing – section 139.
Extraordinary Resolutions – section 138 (1)

An extraordinary resolution is one that is passed by a majority of at least 75% of those voting at
a general meeting of which notice specifying the intention to propose the resolution as an
extraordinary resolution has been given. A resolution that is proposed as an extraordinary
resolution needs 14 days ‘notice in the case of a limited company and seven days’ notice in the
case of an unlimited company, subject to the provisions on short notice. E.g. voluntarily wind up
a company on grounds of insolvency- section 272
As with special resolutions a copy of all extraordinary resolutions must be sent to the Registrar
for filing within fifteen days of passing- section 139.

Unanimous consent at common law

Duomatic Principle

Re Duomatic Ltd (1969) - As an alternative to formally put resolution before a general

meeting, a resolution may be approved by all those who are entitled to attend and vote had a
general meeting been called.

The main purpose is to allow shareholders to decide informally on matters within their
competence – the principle permits wholly informal methods of giving shareholder consent, but
requires that consent (being of all those entitled to vote) to be unanimous. Where an informal
resolution is passed then by it unanimous nature such a resolution is as valid as if it had been
passed in a general meeting – Cane v Jones (1980)

The assent of all relevant shareholders is not required simultaneously but may be given at
different times.

Nb. The rule operates to waive formalities required for the protection of shareholders, but not
those required for the protection of other parties, notably creditors.