NOTICES, RESOLUTIONS, MEETINGS AND MINUTES

(Private Limited Companies Only)

This guide is based on UK law as at 1^st February 2010 unless otherwise stated

Notices

When considering the type of notice, resolution, meeting and minutes required it is hoped that the following information assists to clarify the situation.

Notice of a meeting must be given of 14 days, unless different arrangements are specified in a Company's Articles.  Care must also be taken over "clear days", discussed later below.

Notice of all general meetings must be sent to all shareholders, directors and the auditor.

Special Notice

Special notice of 14 days is required for a resolution:

• Removing a director;
• To appoint another director;
• Appointing as auditor a person other than a retiring auditor;
• To fill a casual vacancy in the office of auditor;
• To reappoint as auditor a retiring auditor who was appointed by the directors to fill a casual vacancy; and
• To remove an auditor before the expiration of his term of office.

The above may not be special resolutions, but they require a special notice.

Resolutions

Resolutions may take the following formats.

Ordinary resolutions

• Increasing authorised capital
• Making a bonus issue
• Subdivision of shares (for example, £1 shares into 5p shares)
• Removal of auditor/director

Ordinary resolutions are not normally required to be notified to Companies House, whereas special resolutions must be notified.

Special Resolutions

These must be filed at Companies House within 15 days.

Virtually all business shall be deemed special, these may include the following resolutions:

• To wind up the company voluntarily because it cannot meet its liabilities;
• To sanction liquidators' powers
• To sanction arrangements between the company and creditors and/or members;
• To dispose of the company's books and liquidators' books;
• To vary the rights of a class of shareholders;
• Declaring a dividend;
• Receiving the accounts;
• Election of directors;
• Auditors' appointment and remuneration.
• To alter the name with sanction of Department of Trade;
• To alter the Articles or Memorandum;
• To create reserve capital;
• To re-register a private/public company as public/private;
• To pay interest to shareholders;
• To reduce capital, supported by a solvency statement by each of the directors
• To declare that the affairs of the company ought to be investigated by the Department of Trade;
• In the case of a dormant company to resolve that auditors may not be appointed;
• To make the liability of directors unlimited;
• To approve the assignment of office by a director;
• To effect a winding-up by the court;
• To sanction the sale of the company's property by the liquidator;
• To re-register an unlimited company as limited;
• To alter the country of registration from England to Wales or vice versa. (Note. A company may not change its country of residence to any other country; not even Scotland);
• To change the company name;
• To stop pre-emption rights; or
• To consider finance for purchase by company of its own shares.

Decisions can now be made more quickly; companies can choose to make more use of electronic methods.  Resolutions can be circulated by email or by other electronic methods such as websites, with shareholder agreement.  This will speed up the decision making process and means most small businesses will be able to make most shareholders' decisions more quickly without the need for a general meeting.

How to avoid notice (i.e. short notice)

A majority of members holding not less that 90 per cent of the nominal value of the shares if present at the meeting may agree that any defect in the notice may be waived.

Written Resolutions

These may appear to still be a worthwhile procedure, as it can save time, but there is one view that unless the Articles of Association allow for written resolutions, the members either have to change the Articles or written resolutions cannot be employed.  It should be noted that written resolutions have been used for many years and the 2006 Companies Act further regularised the procedures so they would now appear to be in order whatever the Articles say.

Whether or not the Articles allow for written resolutions.

If a written resolution is passed;

(a)  the required majority will be similar to that for shareholders meetings - a simple majority of the eligible shares for ordinary resolutions, or 75% for special resolutions.

(b)  It, or a copy of it requires only one signature, but may have more

(c)  It cannot be used to remove directors or auditors before the expiry of their term.

(d)  If one is passed a copy must be sent to the auditors and they must reply within 7 days to the effect that they have no objection.  If they do object they can summon a meeting to discuss the resolution; and

(e)  The original signed resolution must be filed with the Registrar within 15 days and it must be recorded in a minute book.

Clear days

If a notice is posted the notice period does not begin until 48 hours after the posting excluding weekends and bank holidays.  It also excludes the date of the meeting.  So, in order to be safe, add 4 days to each statutory notice period to arrive at the safe, practical period of notice.

An example will explain how this works.  A private limited company AGM notice may be posted on 1^st July.  If the Articles state that notices sent by post are served 48 hours later (excluding week ends and bank holidays), notice will be deemed given on 3^rd July.  Day 1 of the notice period will then be on 4^th July, day 14 will be 17^th July, which means the meeting can be held on 18^th July.  If week ends and bank holidays are to be excluded the notice period can be longer by eight days.

CHART

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