Law and The Corporation

By sec 336 of the Companies Act (2006), the general rule is that every company must hold an annual general meeting within an interval of six months, beginning with the day of its account references. The exception being that if there exists an alteration of accounting references date, and then the AGM may be held within three months of giving a notice. A notice in accordance to see 307(2)[1] should be made within twenty-one days in case of adjournment or within fourteen days on the contrary. Schedule 1.

Givens provisions to the effect that the business of the AGM is: the declaration of the declaration dividend, constriction of accounts, balance sheets and reports of the directors and auditors, the elections of directors and appointment of and fixing of remuneration. special business may also be discussed. (Geoffrey Morse; 1983: 303)An extra-ordinary meeting on the other hand, is any general meeting of a company other than an annual general meeting (sec 302) the foregoing section provides that directors may call a general meeting of a company or may convene the same upon request from holders of paid –up capital that enables them carry the right of voting at general meetings of which in accordance to subsection (3) is ten percent.

The request must state the general nature of the business to be delt with, or may include a resolution that intends to be moved. If within twenty one days the directors do not hold a general meeting sec, 304, provides that the holders of more than half their voting rights may convene it themselves within 3 months after such notice was made to the directors which the expense of holding such meeting is met by the company. (Sec 305 (3) –( 7))Geoffrey Morse in his book company law [2] examines the Jenkins report that recommended that the sec- 132 of the Companies Act 1987 which is now similar to sec 305 (3) be amended to enable the requisition to convene a meeting if the directors fail to do so for a date not later than 28 days of the notice convening the same.

According to this report the above provision gives lee way to directors to defeat the purpose of the above section by calling an extra-ordinary requisition meeting for a date say six months ahead. He holds the view that this is so especially where the directors are both shareholders of majority shares as well as directors.

The above mischief in my view has however been catered for abit in sec 306 where the courts have been given residual powers to order the convening of meeting either upon a director’s or a member’s application. This situation was observed in the case of  Thyme V. Lauder [3] where the court established that the right stipulated in section 305 (3) may be abrogated if the holders are themselves directors who have by failing to attend board meetings been the cause of directors default. I therefore, concede with Jenkins that the above sections be amended.

In the course of the general meetings or annual general meetings, resolutions are passed. Geoffrey Morse promulgates in his book company law that in the absence of any contrary provisions in the act or memorandum and articles of associations, the company in such meetings acts by ordinary resolutions.

However, if the Act or articles and memorandum of associations provide for special resolution or extra-ordinary one, such revolution takes effects in meetings. Jenkins report however recommends that there be an omission of extra-ordinary resolution and replaced by special resolutions instead. I hold the view that any of the resolutions present may not as such make any difference, whether extraordinary or special. The sue generic nature is of similarity.

An ordinary resolution can thus be defined as a resolution passed by a simple majority of the votes of the members entitled to vote and thus implies the voting in person or where allowed by proxy at a meeting where due notice has been given. Sec 168 gives provisions to the effect that a director may be removed from office by an ordinary resolution.

An extra-ordinary resolution on the other hand is a resolution passed by at least a three-fourth majority of the members entitled to vote and voting in person or where allowed by proxy at a general meeting where the notice specifies the intention to propose the resolution as extra-ordinary.

A special resolution is a resolution passed by a majority of at least three –fourth of the members entitled to vote in person or where allowed by proxy. At a meeting in which a special resolution or an extra-ordinary resolution is to be submitted and is passed a declaration by the chairman is conducive that such resolution has carried the day unless otherwise the essence of this provision is to prohibit the resolution from being challenged on grounds that certain shareholders was not qualified to vote. (Geoffrey Morse: 1983).

If however, the declaration of the chairman is fraudulent, or shows on the face of it that the proper majority has not been obtained; it in effect bars the resolution from being conclusive. This was examined in the case of Re Coratal (New) Mines Ltd (1902)

2 ch. 498 where a special resolution was put to the meeting and the chairman said “those in favour 6: those against 23, but there are 200 voting by proxy and I declare there resolution carried”. It was held that the declaration was not conclusive and thus the resolution was not passed. The judge started that the resolution had not been effectively submitted to the meeting, as the proper procedure of proxy was not followed.

In Henderson-V Bank of Australasian (1890) 45- ch –D- 33d (C.A )it was established that if a positive amendment, pertinent to the subject matters of the proposed resolution, is proposed, it must be voted up first If the chairman refuses to put a proper amendment to the meeting the resolution. if passed, is not binding. An amendment can not be moved if it goes beyond the notice convening the meeting. The notice of special business must state the resolution to be passed in such a way as to fairly state the purpose for which the meeting is convened,

For any business to be undertaken, with the inclusion of voting, a quorum of members should be present. According to Geoffrey Morse, a quorum must be an effective quorum. In this case we shall examine what constitutes a quorum and an effective quorum for that matter. For a quorum to be effective, it should constitute of shareholders with a majority of shares that they are conferred with voting rights in a meeting. This are members who are capable of taking part in the decision making of that particular company by airing their votes.

It is however note worthy that articles or memorandums of association or notices for that matter may specify a quorum of members to be present in this case therefore voting by proxy may not be allowed as provided for in the case of M, Harris ltd. Petitioners 1956 S.C 207, in which a member represented by an attorney was held not to be present as the notice clearly stated a present quorum.

A quorum according to company law may constitute of two members present in person. Though no provision as regards quorum has been given in the Companies Act 2006 a quorum according to the previous Act of (1985) table A, part 1 article 53 and statutory usage fixed two members present in person or by proxy as a quorum in the case of a company.

Voting rights in an undertaking as established in schedule 6 and 7 as reads with section 1159 and 1162 of (2006) Act respectively are to the effect that reference is to the rights conferred on shareholders in respect of their shares or in the case of an undertaking not having share capital on members, to vote at general meetings of the undertaking on all, or substantially all matters. (Schedule 7 section 2. (1))

This rights can be exercise when deciding to hire and fire a director(s) [4] to exercise dominant influence so as to enable a decision in favour of majority [5] and such right also infer on certain circumstances of a special nature’

Once it has been identified the rights that exist during the voting session voting ; voting may take place by a show of hands, a poll, or proxy.

It is however the common law principle that passing of a resolution unless otherwise stated in an article or memorandum of associations or notice. In such instances proxies are not counted, thus it is mandatory for members to be present [6] every member present usually has one vote by a show of hands. The equivalent Companies Act (2006) however does not create clear provisions as regards the ways of voting, thus leaving it to the companies articles to give clear provision with regard to mechanisms of voting.

The previous Companies Act gave clear provisions with the ways to be adopted with regard to voting by hand in table A article 62, where voting by proxy in disregarded. Article 63 on the other hand gave provisions as regard joint holders and stated that in such instance the vote of the person whose name comes first shall pass.

Geoffrey Morse asserts that voting by a show of hands is not the best ways of voting as the vote of those with majority shares is counted as one and that the views of those voting by proxy is not taken in to consideration. He establishes that owing to the following short comings, the common laws general rules provide for a request for polls where need arises this can be made either in a special or extra-ordinary resolution or the articles of the company.

The articles of the previous Companies Act provided that a poll may be demanded before, or on the declaration of the result by a show of hands [7]. In the event of a poll, a vote by a show of hands is done away with. In a poll, the number of votes a member has is dependant upon the provisions of the articles. The previous Companies Act section 134 provided that the number of votes shall be dependant upon the number of shares one has or each $ 10 stock held by a shareholder[8]. In a vote by poll unlike by a show of hand members who are not present could have an opportunity to vote. Voting may also take place by proxy.

Any member entitled to attend and vote at a company meeting may appoint another person, whether a member of the company or not to attend and vote as his proxy and if it is a private company to speak as his proxy. Provisions of schedules 6 and 7 give effect to this concept under rule 6 and 7 (1) and (2) and provide that where a person holding a proxy is in a fiduciary relationship such a person shall not be held as him while such rights shall be held by a nominee of that person only  on such persons instructions.


C,A COOKE, Corporation, Trust and Company: A Legal History (1950)

 Companies Act 2006 history (1950)

Companies Act (1985)

Geoffrey Morse, (12 ed) company law Stevens $ Sons, London,(1983).

[1] See also sec.337 on the same[2] (1983) Stevens and sons. London[3](1925) S.N.123(O.H)[4]Schedule 7 rule 3[5] Schedule 7 rule 4[6] Refer to the case of Thyne.v.Lauder.[7]Article 58[8] Sec.134(e) of Companies ACT 1987