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Questions and Answers
Who has the power to remove a director at any time by ordinary resolution?
Who has the power to remove a director at any time by ordinary resolution?
- The company's employees
- The board of directors
- The auditor
- The shareholders (correct)
What is the main purpose of a shareholders meeting?
What is the main purpose of a shareholders meeting?
- To appoint an auditor
- To elect a new board of directors
- To exercise voting rights in relation to company matters (correct)
- To discuss company's financial statements
Who can convene a shareholders meeting?
Who can convene a shareholders meeting?
- The auditor or the company secretary
- Only the board of directors
- The board of directors, any other person specified in the MOI, or the shareholders (correct)
- Only the shareholders
What is the minimum percentage of shareholders required to demand a shareholders meeting?
What is the minimum percentage of shareholders required to demand a shareholders meeting?
What is the consequence of not following the prescribed formalities for a shareholders meeting?
What is the consequence of not following the prescribed formalities for a shareholders meeting?
Who are the holders of a company's issued securities who are entitled to exercise voting rights in relation to a matter?
Who are the holders of a company's issued securities who are entitled to exercise voting rights in relation to a matter?
What is the purpose of a class meeting?
What is the purpose of a class meeting?
Who has the duty to hold a shareholders meeting if demanded by the required percentage of shareholders?
Who has the duty to hold a shareholders meeting if demanded by the required percentage of shareholders?
What is the primary purpose of section 75(4) of the Act?
What is the primary purpose of section 75(4) of the Act?
Which of the following is NOT a standard of a director's conduct according to section 76?
Which of the following is NOT a standard of a director's conduct according to section 76?
Who is considered a related person according to section 2(1) of the Act?
Who is considered a related person according to section 2(1) of the Act?
What is the consequence of a director failing to disclose a personal financial interest before a board meeting?
What is the consequence of a director failing to disclose a personal financial interest before a board meeting?
What is the primary duty of a director according to section 76?
What is the primary duty of a director according to section 76?
What is the purpose of the standards of directors' conduct outlined in section 76?
What is the purpose of the standards of directors' conduct outlined in section 76?
What was the main reason for the directors of Regal to create a new subsidiary, Hastings Amalgamated Cinemas Ltd?
What was the main reason for the directors of Regal to create a new subsidiary, Hastings Amalgamated Cinemas Ltd?
Why did the landlord offer to increase the share capital of Hastings Amalgamated Cinemas Ltd?
Why did the landlord offer to increase the share capital of Hastings Amalgamated Cinemas Ltd?
What was the profit made by the directors per share after selling the business?
What was the profit made by the directors per share after selling the business?
What is the main grounds for the court's decision in Regal (Hastings) Ltd v Gulliver?
What is the main grounds for the court's decision in Regal (Hastings) Ltd v Gulliver?
What is the condition for directors to account for their actions outside the company, as stated in Regal (Hastings) Ltd v Gulliver?
What is the condition for directors to account for their actions outside the company, as stated in Regal (Hastings) Ltd v Gulliver?
What is the rule of equity stated in Regal (Hastings) Ltd v Gulliver?
What is the rule of equity stated in Regal (Hastings) Ltd v Gulliver?
What is the main implication of the court's decision in Regal (Hastings) Ltd v Gulliver?
What is the main implication of the court's decision in Regal (Hastings) Ltd v Gulliver?
What is the relevance of the business judgment rule in the context of Regal (Hastings) Ltd v Gulliver?
What is the relevance of the business judgment rule in the context of Regal (Hastings) Ltd v Gulliver?
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Study Notes
Organs of the Company
- A company can only perform actions through its shareholders, directors, managers, and employees.
- The rights and duties of these groups are usually determined by the Memorandum of Incorporation (MOI) or the Companies Act.
Shareholders and Shareholders Meetings
- A shareholder is the holder of a share issued by a company and is entered as such in the company's securities register.
- A shareholders meeting is a meeting of holders of a company's issued securities who are entitled to exercise voting rights.
- There are two types of shareholders meetings: general meetings (involving all shareholders) and class meetings (involving shareholders of a specific class).
Calling a Shareholders Meeting
- A shareholders meeting can be convened by:
- The board of directors
- Any person specified in the Memorandum of Incorporation or rules
- Shareholders with 10% voting rights attaching to shares, by written demand
- Failure to comply with prescribed formalities for a meeting could result in an invalid decision.
Directors' Duties
Regal (Hastings) Ltd v Gulliver
- Directors must account for activities outside the company if:
- Their actions are related to the company or result from their special knowledge as directors
- Their actions result in profits for themselves
- Court held that directors breached their fiduciary duties to the company by not obtaining fully informed consent from shareholders.
Directors' Personal Financial Interests
- A director may disclose personal financial interests in advance in writing (s 75(4)).
- A director must disclose personal financial interests before a board meeting discussing a matter in which they have an interest (s 75(5)).
- If disclosure is not possible before the meeting, the director may disclose afterwards (s 75(6)).
Related Persons
- A related person includes:
- A spouse or person in a similar relationship
- A person related by no more than two degrees of natural or adopted consanguinity or affinity
- A juristic person controlled by the individual
Standards of Directors' Conduct
- Directors have duties to:
- Not abuse their position or information
- Communicate with the board of directors
- Act in good faith and for a proper purpose
- Act in the best interests of the company
- Act with a certain degree of care, skill, and diligence (s 76)
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