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(a) Outline the qualified minority rights of a member which can only be enforced by the joint efforts of a membership group as defined under...

(a) Outline the qualified minority rights of a member which can only be enforced by the joint efforts of a membership group as defined under the Companies Act.

(b) The Articles of X Company Ltd provide that every member is entitled to one vote for each of the first ten shares and thereafter to one vote for each additional ten shares. Jane owns one hundred shares. She transfers ten of her shares to her nine nominees to increase her voting powering general meetings. Joseph, who is the chairman at the general meeting, refuses to accept the votes of Jane‟s nominees.

Advise Jane on the validity of the Chairman‟s action and her right as a member.

Answers

Martin
(a)
Under the provisions of the Companies Act the following rights are only enforceable by joint effort:

I) Under section 8 (1) of the Companies Act, a company may by special resolution alter the objects clause of the memorandum. However the proposed alteration may be objected to by either. Holders of not less than 15% in nominal value of the Company?s issued share capital. Holders of not less than 15% of any class of shares of the Company. Holders of not less than 15% of the Company's debenture entitling them to object. Not less than 15% of the Company's members.

II) Under section 74 (1) of the Company's Act, proposed variation of class rights may be objected to by holders of not less than 15% of that class of shares who did not consent or vote in favour, by an application to court within 30 days of the resolution or consent.

III) Under section 140 (1) of the Companies Act holders of not less than 1/20 of the total voting rights of all members or not less than 100 members of the Company may requisition notices of any resolution which may properly be moved at the next general meeting. They are also entitled to requisition the Company to circulate to members any statement of not more than 100 words with respect to the matter referred to any proposed resolution or business to be dealt with at a meeting. IV) Under section 132 (1) of the Companies Act holders of not less than 1/10 of the paid up capital of the Company or the total voting rights of all members may requisition an extra ordinary general meeting by depositing a requisition with the Company at its registered office and if the directors do not within 21 days thereof convene a meeting, the requisition or not less than ½ of them may convene a meeting. Such a meeting may be held within three months of the requisition.
V) Under section 137 (1) of the Companies Act, a poll can only be effectively demanded by: o Not less than five members present in person or by proxy. o A member or members representing not less than 1/10 of the total voting rights of all members having the right to vote. o A member or members representing not less than 1/10 of the paid up capital.VI) Under section 165 (1) of the Companies Act a Company?s affairs may be
investigated by an inspector or inspectors appointed by the court at the instigation of either. Not less than 200 members or members holding not less than 1/10 of the issued shares. Not less than 1/5 of the number of persons in the company?s register of members.


(b)
-This problem is based on the right of a member to vote in Company general meetings. It is a trite principle of law that the right to vote is one of the proprietary rights of a member. It is one of the so-called individual membership rights of a member exercisable by a member irrespective of the wishes of the majority and if the right is violated the member has a personal action for redress.
- In this case the articles of X Company are very clear on voting and the Chairman has declined to accept the votes of Jane nominees in violation of Jane?s right to vote in a general meeting. Jane has a course of action to compel the Chairman to adept the votes of her nominees.
- My advise to Jane is to institute legal proceedings against the chairman to 'compel him'to accept the votes, as was observed by Sir George Jessel MR in Pender V. Lushington.
- My advise is based on the decision in Pender V. Lushington whose facts were substantially similar to those of this case.
marto answered the question on February 7, 2019 at 06:20

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