问答题
Fred is a member of Glad Ltd, a small publishing company, holding 100 of its 500 shares. The other 400 shares are held by four other members.
It has recently become apparent that Fred has set up a rival business to Glad Ltd and the other members have decided that he should be expelled from the company. To that end they propose to alter the articles of association to include a new power to ‘require any member to transfer their shares for fair value to the other members upon the passing of
a resolution so to do’.
Required:
问答题
(a) State the procedure which Glad Ltd must follow to alter its articles of association.
(2 marks)
【正确答案】Section 21 Companies Act 2006 provides for the alteration of articles of association by the passing of a special resolution,requiring a 75% vote in favour of the proposition. Consequently, the directors of Glad Ltd must call a general meeting of the company and put forward a resolution to alter the articles as proposed. Fred will be entitled to attend the meeting, speak and vote on the resolution.
If the resolution is successful, a copy of the new articles must be sent to the Companies Registry within 15 days.
【答案解析】
问答题
(b) Explain the effect of the requirement that any alteration to a company’s articles of association must be for the benefit of the company as a whole. (2 marks)
【正确答案】Any such alteration, as is proposed, has to be made ‘bona fide in the interest of the company as a whole’. This test involves a subjective element, in that those deciding the alteration must actually believe they are acting in the interest of the company.There is additionally, however, an objective element requiring that any alteration has to be in the interest of the ‘individual hypothetical member’ (Greenhalgh v Arderne Cinemas Ltd(1951)). Whether any alteration meets this requirement depends
on the facts of the particular case. In Brown v British Abrasive Wheel Co Ltd(1919), an alteration to a company’s articles to allow the 98% majority to buy out the 2% minority shareholders was held to be invalid as not being in the interest of the company as a whole. However, in Sidebottom v Kershaw Leese & Co(1920), an alteration to the articles to give the directors the power to require any shareholder, who entered into competition with the company, to sell their shares to nominees of the directors at a fair price was held to be valid.
【答案解析】
问答题
(c) Explain whether or not the articles of association of Glad Ltd can be altered as proposed.(2 marks)
【正确答案】It is extremely likely that the alteration will be permitted. Fred only controls 20% of the voting power in the company and so he is no position to prevent the passing of the necessary special resolution to alter the articles as proposed. Additionally, it would clearly benefit the company as a whole, and the hypothetical individual shareholder, to prevent Fred from competing with the company, so Fred would lose any challenge he subsequently raised in court