Variation of shareholders’ rights

The power to vary the shareholders’ rights depends on whether there is one class or two or more classes of shares. In the first case the shareholders have membership rights and in the second they have class rights.

Variation of class rights.

Where the rights are contained in the articles or the terms of issue, there is a procedure for variation either with the written consent of three-quarters of the shareholders of that class, or the sanction of an extraordinary resolution passed at a separate class meeting.

If the memorandum prohibits variation, then the rights are unalterable except by way of a reconstruction under s.425. If there is no procedure stipulated in either the memorandum or the articles, variation of rights requires the unanimous consent of all the members of the company. 

Becoming a Member of a Company 

A person can become a member of the company by (i) allotment, (ii) transfer, (iii) transmission, (iv) subscribing to the memorandum and (v) estoppel (holding out). Except in the case of subscription, there are two conditions of membership: agreement to become a member, and entry on the register of members. Transmission is where the shares are passed to another on the death of a former shareholder and estoppel arises where a person allows his name to appear in the register of members without requesting a correction of the register.  

Ceasing to be Member 

A person ceases to be a member of the company by: (i) transfer, (ii) forfeiture or surrender, (iii) sale by the company under its power of lien, (iv) transmission and (v) redemption of redeemable shares. 

Transfer of Shares

 Unless the company’s articles provide otherwise, every shareholder has a right to transfer his shares freely. A share certificate is prima facie evidence of title.

The company has a duty to have ready for delivery a certificate of all shares within two months of allotment or of the date of the lodging of a transfer. 

Restrictions on transfers

The articles of private companies may allow the directors to refuse to register transfers of shares.

Public companies can have restrictions on free transferability except if  their shares are dealt with on the Stock Exhange or the Alternative Investment Market (AIM). The most frequent restriction is the preemption clause which provides that shares cannot be transferred to a non-member as long as there is an existing member prepared to purchase them at a fair price.

 

The Register of Members

 

Every company must keep a register of members. The register must be kept at the registered office or at the place where it is made up; the Registrar of Companies must be informed where it is kept. The register must be available for inspection and members may obtain a copy of the register or part of it on the payment of the appropriate charge.

 

3. Questions.

 

1.  What is a share?

2.  What the principal right of a shareholder?

3.  What is the difference between registered and bearer shares?

4.  What are the main classes of shares?

5.  How can a person become a member of the company?

6.  In what cases does a person cease to be a member of the company?

7.  How can transfer of shares be restricted?

8.  Where must the register of members be kept?

 

4. Find the following sentences in the text.

 

1) Акционеры – владельцы компании, но они владеют активами компании, которые принадлежат компании, как отдельной независимой правовой единице.

2) Акция – это единица измерения интересов члена компании.

3) Акции могут быть заложены в качестве обеспечения для получения ссуды.

4) Прежде всего, все акции обладают одинаковыми правами.

5) Привилегированные акционеры всегда имеют приоритет перед обычными акционерами на выплату фиксированного дивиденда.

6) Существуют два условия членства: согласие стать членом и занесение в список членов.

7) Устав закрытых акционерных компаний может позволять директорам отказаться регистрировать передачу акций.

8) Каждая компания должна вести список членов.