UK Company Law

[JeanLuc]

Can a company limited by guarantee, whose Shareholders currently elect a Board who then elects its chairman and, potentially, vice-chairman, change its Articles of Association (by Special Resolution) to require the chairman (and any other officer) to be specifically elected by the Shareholders at an AGM (ie remove the power to elect the chairman/vice-chairman) from the Board and give it to the Shareholders? Thank you.

 

[WaveJumper]

I keep re-reading your post and it does not seem to make sense

 

[JeanLuc]

Sorry, basically my question is, is it possible to put forward a resolution that the Chairman of the Board be elected by the Shareholders to the Board in that specific role for the period of their Board tenure, thus changing the current Articles that states the Chairman of the Board shall be elected by the Board from among their number.

 

[WaveJumper]

An ordinary resolution is passed when more than 50% of the shareholders present and voting at the meeting vote in favour. A special resolution is passed when 75% of the shareholders present and voting at the meeting vote in favour. So as far as I am aware yes

 

[NicoJ]

A company Ltd by guarantee doesn't normally have shareholders so not entirely sure that you can change the articles.

 

[WaveJumper]

Sounds like his shareholders are just 'members'

 

[JeanLuc]

Yes, sorry. They are members.

 

[JeanLuc]

Thanks you WaveJumper. So this would be a special resolution as it is a change to the Articles. Many thanks.

 

[The Resolver]

You need to check out the existing Articles to see if they have any entrenched provisions eg saying that the appointment of a Chairman cannot be other than by the Board or after following certain provisions. You are welcome to send to me for some free advice.

 

[JeanLuc]

You need to check out the existing Articles to see if they have any entrenched provisions eg saying that the appointment of a Chairman cannot be other than by the Board or after following certain provisions. You are welcome to send to me for some free advice.

Thank you. The only reference to elections of the Chairman and VIce-Chairman is, "The Board may elect a chairman of its meetings and may also elect a vice-chairman to act in the absence of the chairman and may determine the period for which each of them is to hold office; but if no such chairman is elected or if at any meeting neither the chairman nor the vice-chairman, if any, is present within five minutes after the time appointed for holding the same, the Directors present may choose one of their number to be chairman of the meeting."

 

[The Resolver]

This is not an entrenched rule so, subject to the 75% vote the Artciles can be changed. I suggest the change should be that not only do the Members as a whole elect the chairman but that there is a clear procedure set out for nominations/member questions of candidates/voting etc and that the Resolution should not only be to elect the Chair but that such person shall also be a Board member (so therules for Board meetinsg and casting vote are retained . The Chair should also not not be at risk of being removed by ordinary vote of the Board but only by &%% vote fo all Members or if resigns from Chairmanship/another Chairman is elected. In other words the posiiotn fo Chair should be tied to the status of a Board member. There will be other procdural detail to consider. Happy to help out with the drafting

 

[JeanLuc]

This is not an entrenched rule so, subject to the 75% vote the Artciles can be changed. I suggest the change should be that not only do the Members as a whole elect the chairman but that there is a clear procedure set out for nominations/member questions of candidates/voting etc and that the Resolution should not only be to elect the Chair but that such person shall also be a Board member (so therules for Board meetinsg and casting vote are retained . The Chair should also not not be at risk of being removed by ordinary vote of the Board but only by &%% vote fo all Members or if resigns from Chairmanship/another Chairman is elected. In other words the posiiotn fo Chair should be tied to the status of a Board member. There will be other procdural detail to consider. Happy to help out with the drafting

Many thanks, Graham. I have emailed you, if that is acceptable.

 

[The Resolver]

Yes you are welcme.