Question Tag: Special Resolution

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  • 4 Marks

BCL – Nov 2020 – L1 – Q3a – Company Meetings and Resolutions

Identify processes required to vary the class rights of shareholders without court sanction.

Identify TWO (2) processes required to vary the class rights of shareholders without the sanction of the Court. (4 marks)

  • By a special resolution to alter the company’s Regulations to insert provisions regarding the variations of the rights of a class or to modify the terms of those provisions.
  • The alteration shall require the prior written consent of the holders of at least three-fourths of the issued shares of each class.
  • The sanction of a special resolution of holders of the shares of each class.

(2 points for 2 marks each)

  • 4 Marks

BCL – May 2020 – L2 – Q5a – Company Meetings and Resolutions

Distinguish between an ordinary resolution and a special resolution.

Distinguish between an Ordinary Resolution and a Special Resolution.
(4 marks)

  1. Ordinary Resolution:
    • An ordinary resolution is one that is passed by a simple majority of votes cast by members entitled to vote, either in person or by proxy, at a general meeting.
    • Typically used for routine decisions such as the appointment of directors, approval of dividends, and other standard business matters.
  2. Special Resolution:
    • A special resolution requires a higher threshold and is passed by not less than three-fourths (3/4) of the votes cast by members entitled to vote, either in person or by proxy, at a general meeting.
    • Special resolutions are used for significant decisions such as amending the company’s constitution, changing the company’s name, or approving a merger or liquidation.

(2 marks each = 4 marks)

  • 10 Marks

BCL – May 2020 – L2 – Q3a – Company Meetings and Resolutions

Explain what constitutes the ordinary business of an AGM and the procedure for private liquidation.

On 26th February 2018, Gold Link Limited, a public limited liability company trading on the Ghana Stock Exchange sent a notice to its shareholders inviting them to an Annual General Meeting (AGM) on 2nd March 2019. The notice simply states that the ‘purpose is to transact the ordinary business’. Namoale is a shareholder of Gold Link Limited and is very disturbed about the vagueness of the notice. He is also not satisfied with the performance of the company and is seeking to requisition for a special resolution to liquidate the company.

Required:

i) Explain to Namoale, what constitutes ‘the ordinary business of an annual general meeting’ and state TWO (2) other information, Namoale must see in the notice for an AGM.
(5 marks)

ii) Advise Namoale on the procedure for private liquidation.
(5 marks)

i) Ordinary Business of an Annual General Meeting (AGM):

  • According to Section 153 of the Companies Act, 1963 (Act 179), the notice of a general meeting must contain sufficient details to enable persons entitled to attend to decide whether to attend and to prepare their minds on how to vote.
  • The phrase ‘to transact the ordinary business’ of an AGM typically refers to the following items:
    • Declaration of dividends.
    • Election of directors in place of those retiring.
    • Consideration of the accounts and reports of auditors and directors.
    • Fixing the remuneration of auditors.
    • Removal and election of auditors and directors in accordance with sections 135 and 185 respectively.
  • Additional information that must be included in the notice for an AGM:
    • Date, time, and place of the meeting.
    • Statement that a member has the right to appoint a proxy to attend on their behalf.

(5 marks)

ii) Procedure for Private Liquidation:

  • Affidavit of Solvency: Directors must make an affidavit of solvency, confirming that they have thoroughly inquired into the company’s affairs and believe it can pay its debts within 12 months from the start of the liquidation.
  • Resolution for Winding Up: A special resolution must be passed by at least 75% of the company’s shareholders to approve the liquidation. The resolution should also include the appointment of a liquidator.
  • Liquidator’s Consent: The person named as the liquidator must have previously consented in writing to the appointment.
  • Registrar Notification: Within fourteen days of passing the resolution, the company must send a copy of the resolution to the Registrar, who will publish it in the Companies Bulletin.
  • Transfer of Powers: Upon appointment, the powers of the board of directors vest in the liquidator, and the authority of directors ceases except for any necessary actions permitted by the liquidator.

(5 marks)

  • 4 Marks

BCL – May 2018 – L1 – Q7b – Company Meetings and Resolutions

Define a special resolution under the Companies Act.

Define special resolution. (4 marks)

A resolution is a special resolution under section 168 of ACT 179 when it is passed by not less than three-fourths of the votes cast by the members of the company who, being entitled so to do, vote in person or, where proxies are allowed, by proxy at a general meeting of which notice specifying the intention to propose the resolution as a special resolution has been duly given. (4 marks)

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