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Special resolutions and other resolutions requiring 75 per cent member approval under the Companies Act 2006鈥攃hecklist Special resolutions The Companies Act 2006 (CA 2006) sets out certain matters that must be passed by the members (or by a class of members) of a company as a special resolution (ie by a majority of not less than 75%) or by the holders of at least 75% of shares or of a class of shares. If a written resolution is to be passed as a special resolution, to be effectively passed as a special resolution, it must state that the resolution was proposed as a a special resolution. See Practice Notes: Member resolutions and Written resolutions for more details about shareholder resolutions and written resolutions. Note that: 鈥 anything done by ordinary resolution may also be done by special resolution, and 鈥 in addition to complying with the requirements of CA 2006, it may be necessary to comply with the requirements of any shareholders' agreement (or other governing document) as...
Articles (MBO)鈥攃hecklist Objects Is it necessary or appropriate for the company to restrict its objects? If the company was incorporated before 1 October 2009, check if any of the objects stated in its memorandum of association need deleting (by way of a members鈥 special resolution). Application of model articles Determine if the model articles are to apply to the company. If the company was incorporated before 1 October 2009, consider whether Table A should still apply (if not previously amended). Determine what, if any, of the model articles should not apply to the company. Board of directors How many directors will be on the board? Which of the managers will be directors? How many directors will the investor have the right to appoint to the board? What is the quorum for board meetings? Does the chair (or other director) have a second or casting vote? Are fees payable to the investor directors and/or chair? If so, what are they? Set out administrative matters relating to the board (eg frequency of...
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Share capital, class rights and the impact of a new share scheme Background Companies incorporated under the Companies Act 2006 (CA 2006) are either established on a limited or unlimited basis. This means that the liability of the members of the company is either limited or unlimited by its constitution. If the company is limited (whether private or public), it can either be limited by shares or limited by guarantee. In the case of a public company limited by guarantee, it must also have a share capital. Regardless of whether a company is public or private, if it is limited by shares, the liability of its members is limited to the amount, if any, unpaid on their shares. If it is limited by guarantee, the liability of its members is limited to the amount of their guarantee. What is a share and share capital? The generally accepted commercial meaning of share capital is the funds of a company raised by the issue of shares (whether on incorporation...
Quorum requirements for general meetings (including AGMs) This Practice Note summarises the law relating to quorum requirements for a company鈥檚 general meeting or annual general meeting (AGM) and discusses the minimum quorum requirements under the Companies Act 2006 (CA 2006) and the Model Articles for private companies limited by shares and the Model Articles for public companies as set out in the Companies (Model Articles) Regulations 2008, SI 2008/3229, Sch 1 and Sch 3. A general meeting (including an AGM) must satisfy the relevant quorum requirements (be quorate) for business to be validly transacted at the meeting. If the relevant quorum requirements are not satisfied (ie, the meeting is inquorate), any business transacted will be void. In practice, quorum requirements are often set out in a company's articles of association. Where the articles contain no such provisions, then the relevant provisions of CA 2006 will apply. During the coronavirus (COVID-19) pandemic, and the resulting restrictions on gatherings, many companies, in line with emergency legislation and governmental guidance,...
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Class rights provisions鈥攁rticles Add new definitions to 鈥榙efinitions鈥 article: A director 鈥 means any director appointed by holders of the A ordinary shares; B director 鈥 means any director appointed by holders of the B ordinary shares; A ordinary shares 鈥 means the A ordinary shares of [insert amount] each in the capital of the Company; B ordinary shares 鈥 means the B ordinary shares of [insert amount] each in the capital of the Company; eligible director 鈥 means a director who would be entitled to vote on the matter if proposed as a resolution at a meeting of directors; Add the following new clauses as required and renumber document accordingly: 1 Number of directors 1.1 The number of directors (excluding alternate directors) shall not be less than [two] in number[ nor more than [insert maximum number]] [ and shall be made up of [insert number] A directors and [insert number] B directors]. 2 Proceedings of directors 2.1 Subject to the provisions of these articles, the directors...
Ireland鈥擟onstitution鈥攑rivate company limited by shares Companies Act 2014 Form of Constitution of Private Company Limited by Shares of [Insert company name] Limited PRELIMINARY 1 The name of the Company is: [insert company name] Limited (the 鈥淐ompany鈥) 2 The Company is a private Company limited by shares, registered under Part 2 of the Companies Act 2014 (the 鈥淎ct鈥). 3 The liability of the members is limited. A private limited company (LTD) is not required to have an authorised share capital, however this can be inserted if required. We have left this option in square brackets however most newly incorporated LTDs have dispensed with authorised share capital. A Ordinary and B Ordinary Shares included for illustration purposes. 4 The share capital of the Company is [鈧琜insert amount]] divided into [insert number] A Ordinary Shares of 鈧琜insert amount] each and B ordinary shares of 鈧琜insert amount] each. SUPPLEMENTAL REGULATIONS Interpretation and general An optional provision holding that post-incorporation, subsequent directors may be appointed by members in a general meeting. This is...
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Can a private company limited by shares carry out a rights issue? A rights issue is an offer of shares to existing shareholders of a company, which gives them the right to subscribe for additional shares in proportion to their existing shareholding in the shares of the company, eg, a right for each shareholder to subscribe for one new share for every five shares that they hold. The shares are usually offered to the existing shareholders by means of renounceable letters or other negotiable instruments. If a company wants to raise new capital through an issue of its ordinary shares for cash, it is prima facie obliged by section 561 of the Companies Act 2006 (CA 2006) to do so by means of a rights issue in favour of its existing shareholders. CA 2006, s 561 sets out statutory pre-emption rights and states that a company must not allot equity securities to a person on any terms unless: 鈥 it has made an offer to each holder of...
Does a shareholder resolution (to create a new class of shares) become part of the articles of association? The company鈥檚 constitution A given resolution is not technically deemed part of the articles of association, but certain resolutions may amend, enhance or otherwise alter the articles. Rather than viewing resolutions as being part of the articles, it is more accurate to view the articles and 鈥榓ny resolutions and agreements affecting a company鈥檚 constitution鈥 comprise as being that company鈥檚 constitution (section 17 of the Companies Act 2006 (CA 2006)). Resolutions and agreements affecting a company鈥檚 constitution include (CA 2006, s 29): 鈥 any special resolution 鈥 any resolution or agreement agreed to by all the members of a company pursuant to the principle of unanimous consent that, if not so agreed to, would not have been effective for its purpose unless passed as a special resolution 鈥 any resolution or agreement agreed to by all the members of a class of shareholders pursuant to the principle of unanimous consent that, if not...
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Restructuring & Insolvency analysis: At a convening hearing under Part 26A of the Companies Act 2006 (CA 2006) the High Court considered a proposed restructuring plan of a Hong Kong listed property company. Having satisfied itself that it had jurisdiction under Part 26A to consider the proposal, the court went on to reject a creditor鈥檚 objections to the plan proponent鈥檚 requirement for four different classes of creditors. In doing so, Mr Justice Thompsell provided helpful analysis of the authorities concerning class composition. The court also held that creditors were not prevented from raising points relating to class composition at any subsequent sanction hearing if they could offer an explanation as to why they had not done so sooner. While noting that it was not for the court to approve the proposed Explanatory Statement, Mr Justice Thompsell did require it to give greater prominence to the plan鈥檚 effect on shareholders given their absence from the four proposed creditor classes. Written by Ben Channer, barrister at 3 Hare Court.
Law360, Expert Analysis: Earlier this year, the technology working group of HM Treasury outlined the initial stages of a strategic road map for the development of a fund tokenisation industry in the UK, with a final phase to be confirmed by the end of 2024. Andrew Tsang, associate, and Tom Bacon, partner, at聽Bryan Cave Leighton Paisner LLP consider the proposed model for implementation, potential next steps, and wider developments within the digital assets space that would offer greater legal and market certainty to the creation of tokenised investment funds.
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