Does a class of non-voting shares lose their right to participate …

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This topic contains 5 replies, has 2 voices, and was last updated by  Jonathan Lea 1 year, 11 months ago.

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  • #2827

    artbenis
    Participant

    in written resolutions?

    1. If a class of B shares is said to have “no attached voting rights” in the articles, do they lose their right to participate in a written special resolution amending the articles?

    B shareholders clearly cannot vote at general meetings but is signing a written resolution “voting”?

    2. And if the B shares do have the right to participate in such a written special resolution, is a number of signers holding 75% of the shares in each class of shares required to pass the resolution?

    #2830

    Jonathan Lea
    Keymaster

    If such B shares are clearly classed as non-voting shares then such shareholder will not be able to vote on any shareholder matters, whether voting occurs at a general meeting or via written resolution.

    Decisions that are required to be made by ‘special resolution’ have to be passed by shareholders holding at least 75% of the voting shares.

    #2832

    artbenis
    Participant

    1. If a group of “nonvoting” B shareholders representing 75% of all the aggregated shares of a private company presented the company a validly signed written special resolution, would this procedure be considered “voting”? (Assume such designated “nonvoting” B shareholders have not had their right to present a written resolution or to approve a written resolution specifically removed in the Articles)

    2. Even if not considered a “vote”, the above would anyway not be a validly passed written resolution under CA 2006, Section 283(2) requiring passage by 75% of total voting rights?

    3. To pass, does a written special resolution require approval by shareholders representing 75% of the total voting rights in all eligible classes aggregated? (Not a number of shareholders representing more than 75% of the total voting rights in each each eligible shareholder class)

    #2833

    Jonathan Lea
    Keymaster

    A solicitor would need to review all relevant documentation to give a definitive answer, but:

    1) If the B shareholders have clearly been issued with non-voting shares then they are not able to pass any shareholder resolutions, whether written or those voted on in a general meeting. There would be no need to remove from the articles any right to present a written resolution or to approve a written resolution as they would never had had such right in the first place.

    2) Unless varied by a company’s constitution, then any resolution designated as a ‘special’ one by the Companies Act 2006 will need to be passed by shareholders holding 75% or more of the voting shares.

    3) Usually shares with voting rights are restricted to one class of shares. I don’t believe there is any case or statutory law on this point, but where there is more than one class of voting shares I would think a written special resolution would require approval by shareholders representing 75% of the total voting rights in all eligible classes aggregated.

    I recommend you seek guidance from the solicitor who originally put together the constitution and advised on the share classes.

    #2835

    artbenis
    Participant

    Thanks, quite clear.

    By the way:

    Google has three classes of shares with 0, 1, and 10 votes.

    Also B shareholders with no voting rights attached still have a right (under CA 2006, S.630) to approve a written special resolution creating a variation of rights still attached to that class. That approval requires written approval by holders of 75% of the shares in nonvoting Class B (as well as approval by holders of 75% of the aggregated voting rights)?

    #2839

    Jonathan Lea
    Keymaster

    Like Google has done in the US, in the UK you could also establish weighted voting rights for different classes of shares.

    The purpose of s.630 is to protect shareholders who belong to a certain class from having their rights subsequently varied.

    If there is no provision in the company’s articles for the variation of existing rights, in accordance with s.630 rights attached to a class of a company’s shares may only be varied with:

    (a) consent in writing from the holders of at least three-quarters in nominal value of the issued shares of that class (excluding any shares held as treasury shares), or

    (b) a special resolution passed at a separate general meeting of the holders of that class sanctioning the variation.

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