Company formation and constitution — SQE1 BLP question
A worked single-best-answer question on company formation and constitution, with why each wrong option is wrong — the way SQE1 traps candidates.
Ashdown Ltd has 1,000 ordinary shares, each carrying one vote. Arun holds 400 shares, Bea 300, Cyrus 200 and Dana 100. A general meeting is properly convened to consider a special resolution to adopt new articles of association. Arun, Bea and Dana attend in person; Cyrus does not attend and appoints no proxy. A poll is validly demanded and taken: Arun and Bea vote in favour and Dana votes against.
Has the resolution to adopt new articles been passed?
- ANo, because a special resolution requires the support of members holding at least 75% of all the company's voting rights, including those of absent members.
- BNo, because only two of the three members voting supported the resolution, which is less than 75% of those voting.
- CNo, because the articles of a company may only be changed with the unanimous consent of its members.
- DYes, but it will not take effect until a copy of the resolution and the new articles has been registered at Companies House.
- EYes, because members holding 87.5% of the votes cast on the poll voted in favour, which exceeds the required 75%.
Show answer and reasoning
Rule: A special resolution on a poll at a meeting requires not less than 75% of the voting rights of the members who vote (CA 2006 s 283(5)).
- A The 75% of total voting rights test applies to written resolutions (s 283(2)); at a meeting on a poll it is 75% of votes cast. (wrong rule)
- B Counting members applies on a show of hands; here a poll was taken, so votes are counted by shares. (right rule, wrong facts)
- C Articles may be amended by special resolution under s 21; unanimity is not required. (wrong rule)
- D The resolution is passed when the vote is taken; filing within 15 days (s 30) is a separate obligation. (wrong rule)
Source: Companies Act 2006, ss 21(1), 283(1), (4)-(5), 30