TEMASEK POLYTECHNIC
SCHOOL OF BUSINESS - DIPLOMA IN LAW & MANAGEMENT
CORPORATE GOVERNANCE & COMPLIANCE
AY 2015/16 April Semester
TUTORIAL4 | Shareholders’ and Directors’ MeetingsOrdinary and Special ResolutionsVoting by ShareholdersQuorum | | Week Beginning: 18 May 2015 | OBJECTIVES | By the end of the lesson, you will be able to: * explain the differences between a Shareholders’ and Directors’ Meeting. * describe the process for a Shareholder’s Meeting. * describe the ways for Shareholders to vote. * describe the quorum required for a meeting. * analyse how Shareholders’ Meeting should be held as set out in the Code of Corporate Governance. |
Activity 1: From William to Kate
Fill in the blanks to this long letter written by Kate to William sharing his “1st day at work” experience.
My darling KateJust finished my 1st day at work at Kensington Corporate & Accounting Services. What a day! I thought you would usually have an orientation on the 1st day, where people are all nice to you, buy you lunch, make sure you are all settled down, and go for tea break. That was what happened at my SIP. I think once you become an employee, it is very different. Everybody is just so matter-of-fact and after a ½ hour tour around the office and a brief introduction to everyone, I was shown my little cubicle and then work just started!!Anyway, I had to draft a couple of Notices of Resolution. I had forgotten what I studied in TP so had to check up the Companies Act in Singapore Statutes Online. Found out that the resolution under Section 161 is a/an ordinary resolution (need 50% of votes, 14 days’ notice for private companies and 14 days’ notice for public companies) and the resolution to change the name of a company is a/an special resolution (75% of votes, 14 days’ notice for private companies, and 21 days’ for public companies) In the Companies Act, unless it is specifically stated that it is a/an special resolution, then the resolution is a/an ordinary one. As I studied the resolution for approval for the issue of shares more closely, I remember that this is one of the instances where directors need to get approval of shareholders for certain decisions. Two other examples where shareholders’ approval is need include amending the M&A, liquidation, remuneration of directors.Now in fact under the new law private companies may by unanimous resolution dispense with the holding of general meetings. Isn’t that interesting? Do you think that will lower the costs of running and administering a company?Also the protection given to minority shareholders is that at least 5% of shareholders can still by written notice demand that a general meeting be convened. Usually resolutions are proposed by directors but if members wish to propose a resolution, they have to give 28 days notice and then the company has 14 days to give notice to all members (s185). I think I also have to brush up my knowledge on the voting process because there is an EGM which my boss wants me to attend. If I am not wrong, usually voting is by show od hands and each member gets a revote per person, but if it is voting by poll, each member gets one vote in respect of each share held. In order to demand this second method of voting , however, it must be requested by either of the following three: (1)any 5 or more members having the right to vote s178(1)(b), or (2) a member or members representing at least 10% of total voting rights of all the members present at the meeting, or (3) a member or members holding shares on which are paid up.There’s just so much to learn now. So far it is ok, but I am still waiting for replies to my university applications. I think once I get accepted, I will quit this job. Then I can be like you- be a student again!Anyway bye and take care.Love, William |
Activity 2: Shareholders’ Meetings
ABC Pte Ltd is a shareholder of XYZ Pte Ltd.
(a) Who represents ABC to attend the general meetings of XYZ Pte Ltd and vote on behalf of ABC? Is there any formal appointment? [Hint: That person is not called a proxy - a proxy is appointed by an individual (who completes & signs a proxy form.]
Authorised corporate representative
S179 – quorum
S179(3) company to appoint person to attend meeting
Table A 47, court representative
(b) How would XYZ’s company secretariat know that the person claiming to represent ABC is indeed the authorised representative?
S179(5) authorised by a certificate with company seal
(c) What if the person who is appointed and authorised to represent ABC finds himself unable to attend a general meeting of XYZ? Proxy by writing
Activity 3: Directors’ Meetings (3a) How can a director who travel a lot and is not able to attend directors’ meeting vote on matters?
Proxy s(181)(1) * Circulated director’s resolutions provided its in M&A (s 90)
(b) What are the advantages and disadvantages of (i) meeting physically and (ii) not meeting physically?
The following is found in the heading of a Directors’ resolution.
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Knot Free Pte Ltd
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(Resolutions In Writing of the Board of Directors
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Pursuant to the Articles of the Company)
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RESOLVED THAT:
(i) What is this type of resolutions called? What is the advantage? Can all companies pass resolutions by such means?
Circular resolution – in writing Easy to pass, saves time YES
(ii) Do you need to prepare any related documents?
* Letter explaining details of resolution * Draft resolution (If super easy, only need draft reso) * Boards paper, cover letter
(iii) How many directors need to sign the document?
* 50%
Activity 4: Desirable Desserts
Rina, Bala, Bernard, Sally and Tom are good friends who have known one another since secondary school days. All of them went to Temasek Polytechnic together and after obtaining excellent results, they are now working at Raffles Place.
One day, during one of their usual lunch gatherings, Bala announces to the other four that he intends to quit his job at the bank to open and run a desserts café. He asks his friends if they are interested to join him. They all jump at the idea as they are not too happy in their current jobs.
Bala tells the other four that he will put in $50,000 to own 50% of the business to be called “Desirable Desserts Café”. Rina is prepared to invest $5,000 and Sally agrees to invest $25,000. Bernard and Tom will invest $10,000 each.
In less than six months, on 31st January 2011, a company is incorporated under the name of Desirable Desserts (Singapore) Pte Ltd and the café commences business at an upmarket shopping mall at Orchard Road.
In their busy schedule, the five friends have forgotten about the legal requirements regarding the convening of meetings. All the five friends have done so far is to appoint directors, company secretary and the company auditors. They have also determined that the company’s financial year end would be 31st December.
(a) Advise Desirable Desserts (Singapore) Pte Ltd on all the legal requirements it has to comply with within the first 24 months of commencement of its business. What are the consequences if such requirements are not met?
* Hold AGM (18 months upon incorporation) * Subsequently AGM must be hold every calendar year and not more than 15 months
(b) After some disputes, Bernard and Tom are seriously thinking of winding up the company as they no longer wish to work with Bala. They come to you for advice. Tom tells you that he will be travelling extensively for the next six months and will not be present at any meeting. The two of them are worried that if Bala does not co-operate, there will be a deadlock at meetings.
(i) Advise Tom how he can support Bernard even though he is unable to attend the meetings.
Have a proxy and instruct him on his priorities and interests accordingly.
(ii) What if Bernard and Tom got Sally and Rina’s support and all four of them agree to boycott meetings convened by Bala? Can Bala proceed to have a meeting by himself? Assume that Table A is applicable to the company.
No. Needs at least 2 members for a quorum. S48 Table A. S392 irregularities doesn’t invalidate meeting
Activity 5: Pandora Productions Pte Ltd
Pandora Productions Pte Ltd sent out a notice of extraordinary general meeting to all members of the company. The notice contains the following footnote:
“A member of the company entitled to attend and vote at a general meeting is entitled to appoint a proxy to attend and vote instead of him. A proxy need not be a member of the company.”
Alice was a proxy at the EGM. She represented Zara, a member holding 10%, who had duly deposited her signed proxy form. When a particular resolution was tabled, the chairman called for voting by show of hands. Alice was instructed by Zara to demand a poll, and so she did. However, the chairman, noting that Alice was a proxy and not a member, denied her demand. The resolution was passed on a show of hands for it.
(a) Advise Zara/ Alice whether the resolution would be valid.
S181(1) of CA – proxies have same rights or a members. S178 of CA – right to demand a poll
(b) If Pandora is a public listed company, how should shareholders’ meetings be conducted? (Please refer to the Code of Corporate Governance 2012).
Principle 16.5, resolution by poll instead. 16.21 – bundling, putting matters together instead of splitting 16.4 – minutes records discussions as well 