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Alex J.
Alex J., Solicitor
Category: Law
Satisfied Customers: 3498
Experience:  Solicitors 2 years plus PQE
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A not for profit organisation that is limited held its AGM

Customer Question

A not for profit organisation that is limited held its AGM last week where its chairman and directors were appointed by vote from the club members. It was discovered the following day that some voters were not members and therefore ineligible to vote, (this would have meant a different outcome) and has caused uproar within the club. A request by 10% of club members requested an EGM under section 303 of the Companies Act, this meeting has been agreed but the committee are stating that there will not be a revote. Is there anything that can be done?
Submitted: 24 days ago.
Category: Law
Customer: replied 24 days ago.
They are quoting section 23 as their reason
Expert:  Alex J. replied 24 days ago.

Hi, Thank you for your question and welcome. My name is ***** ***** i will assist you. What percentage of voters/members actually want to have a re vote? Kind regards AJ

Customer: replied 23 days ago.
Does that make a difference then? I suspect probably about 35%, 14 members signed the request to hold the EGM as per the 10% stated in section 303.
Expert:  Alex J. replied 23 days ago.

Hi, Thank you. It would make a difference as you would need more than 50% of the voting members to force through any resolution. If the directors refuse to exercise their power you could have a claim against them for breach of fiduciary or statutory duty under S.172-177 of the Companies Act - this would be a last resort. Is there a mechanism to change the directors in the company articles? Kind regards AJ

Customer: replied 23 days ago.
Hi Alex, What would the resolution be? Members just want a revote or possibly null and void the AGM and do it all again.
Customer: replied 23 days ago.
Hi Alex, saying you've responded but I can't see it
Expert:  Alex J. replied 23 days ago.

Hi, Thank you. ***** ask what exactly was voted on at this resolution? What was the subject matter? Kind regards AJ

Customer: replied 23 days ago.
Alex, as stated in my first question. I think maybe you need to reread as I'm not sure you're with me.
Expert:  Alex J. replied 23 days ago.

Hi, Thank you. My apologies, the only subject matter you are seeking to challenge is the validity of the appointment of the directors and chairman? Was this a resolution to renew their appointment? What type of articles of association does the company have? Kind regards AJ

Customer: replied 23 days ago.
No worries Alex, Yes that's correct. Each year the club has an AGM, part of which is to appoint the Directors (one of which is the Chairman) and the committee, Often the Chairman is just to renew but when another member also wishes to be chairman then the members vote. This is where our problem began.What do you mean by 'type'?
Customer: replied 23 days ago.
At the time of the meeting someone raised that a non member had voted, when this person was asked they denied it, however other people have no come forward to say they witnessed them voting and that they lied.
Expert:  Alex J. replied 23 days ago.

Hi, Thank you. Are the articles of assocation the table A or model articles or are they bespoke articles? kind regards AJ

Customer: replied 23 days ago.
It was incorporated in 1987, I think they are bespoke
Customer: replied 23 days ago.
Am I right though that company law overrides the Articles?
Expert:  Alex J. replied 23 days ago.

Hi, Thank you. Yes company law does override the articles, but if the directors are not validly appointed then technically any action or resolution they subsequently pass is not valid either. You would need the articles to tell you what should happen if there are no valid directors of the company - normally they say that all the invalid directors can do is call another meeting to validly appoint new directors. As a starting point I would get the dissenting shareholder group to write a letter to the board from a solicitor declaring their appointment in valid - at least then you have it on record. Once they see you have taken legal advice this should put enough pressure on them to force them to actually reconsider the vote or the motion. Suing them in court for breach of director duty is really a last resort. Kind regards AJ

Customer: replied 23 days ago.
What about their reasoning that they won't undertake another vote under section 23?
Customer: replied 23 days ago.
Also Companies House has yet to be updated with new Directors, will that have any bearing?
Expert:  Alex J. replied 20 days ago.

Hi, Thank you. ***** is just an administrative record, if the appointment of the directors has been done incorrectly then merely filing it at Companies House will not validate the appointment. Are they referring to S.23 of the the Articles? Kind regards AJ

Customer: replied 20 days ago.
No 23 of companies act, where in the act does it state about 50% of membership
as per your earlier answer?
Expert:  Alex J. replied 20 days ago.

Hi, Thank you. A director can be appointed or removed by Ordinary resolution. An ordinary resolution can be passed by a voting majority represented by more than 50% of the share capital. This is S.23 of the Companies Act 2006

Notice to registrar of existence of restriction on amendment of articles - what is their alleged relevance of this?

Customer: replied 20 days ago.
Sorry don't understand your question
Am I able to send a photo of the letter to you?
Expert:  Alex J. replied 19 days ago.

Hi, Thank you. Yes please include it in this thread? Kind regards AJ

Customer: replied 18 days ago.
Hopefully this gets to you
Expert:  Alex J. replied 18 days ago.

Thank you. The s23 they refer to is under the constitution not the Companies Act. If they wont declare the meeting void then call a meeting under S.303 to replace the board of directors. Do you more than 50% of the votes? Kind regards AJ

Customer: replied 17 days ago.
Thanks Alex the letter I sent you was in response to a letter we send requesting a meeting under S. 303 which the letter states they agree to and planned for Dec 6th, so what would our next step be? Sorry don't understand the last question you've asked I think a bit's missing
Customer: replied 16 days ago.
Hi Alex not had a response from you
Expert:  Alex J. replied 16 days ago.

Hi, My apologies. If you have the support of more than 50% of the voting share capital you can propose a resolution to remove directors - that is if they wont declare the vote from the last meeting invalid. Kind regards AJ

Customer: replied 16 days ago.
Thanks Alex is this stated in the Companies Act or where could we show them that this is a legitimate request? I'd like to find it as a law if possible
Expert:  Alex J. replied 16 days ago.

Hi

Thank you. You can remove a director by ordinary resolution, see S.168 of the Companies Act 2006.

Kind regards

AJ

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