Free Law Dissertations - As You All Are Aware John Has Been Working For The Company For The Last
As you all are aware John has been working for the Company for the last fifteen years as a self-employed computer consultant and especially in the last couple of years the demand for his type of work has increased considerably. As a result John has become closely involved in the day to day work of the company. Therefore to reward his hard work, contribution towards the success of this company and commitment, the board is keen to appoint him as a director on six year fixed term service contract with a salary of £60,000 plus benefits. In addition to this John will become a shareholder of the company and willing to buy 100 shares at a market price, agreed by the Board with John, of £285 per share. Although this would dilute your shareholding it is a necessary change which reflects the growth of the business and sends out the message that this organisation rewards the contribution towards the building up the business from its staff very well.
In order to implement the proposed changes there are number of documents need to be prepared and filed at the Companies House to comply with the Company Law requirements. I have explained these documents below and would like to invite you to read these carefully.
1. As shareholders of the Company you have right to attend and vote at the general meetings.
2. At the Extraordinary General Meeting there are two types of resolutions which have been proposed. The business at the meeting can only be carried out by passing the appropriate resolution.
3. An ordinary resolution needs a simple majority of votes that is over 50% in favour in order it to be passed at the meeting. If equal number of votes are in favour and against the resolution then a chairman’s casting vote can be used if it is provided in the Articles. As the Company has adopted Table A without change article 50 would apply which gives the chairman a casting vote.
4. The importance of a casting vote is to avoid deadlock situations.
5. A special resolution requires three quarters majority in favour of that resolution in order it to be passed. A special resolution is required by the Companies Act to alter the Articles of the Company and to exclude pre-emption rights on the issue of shares. A special resolution is needed to increase the share capital and to authorise the directors to do so.
6. Section 80 of Companies Act 1985 restricts the power of the directors to issue shares. Therefore it is necessary to authorise the directors to issue shares by altering the company’s articles. The authorisation is given by for a particular reason i.e. in order to bring Mr Markham on Board by issuing him 100 shares.
7. Share capital can only be increased if the articles allow it. Regulation 32 of Table A does. Once the resolution is passed the copy of the amended memorandum and together with form 123 must be filed at the Companies House.
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