Minority Shareholders Rights
- Posted by admin
- 04 September 2012
- Company Secretarial
RIGHTS OF MINORITY SHAREHOLDERS
RIGHT UNDER THE MEMORANDUM AND ARTICLES OF ASSOCIATION (‘M&A’)
The M&A binds the shareholders to the Company as well as each shareholder amongst themselves. An affected shareholder may bring an action in court to prevent any proposed breach of the M&A. Further, the law states that the M&A has to be amended by a special resolution, i.e. requiring a majority of not less than three-fourths of the shareholders voting either in person or by proxy at the general meeting of the Company.
RIGHT TO INFORMATION
The following are information which the minority shareholders are allowed to inspect at the registered office of the Company:-
The register of shareholders. This register would provide information as to the names and addresses of the shareholders and their shareholdings in the Company.
The registers of director, secretary, manager and auditor. This register would contain certain prescribed information on the personal particulars of these persons and of their appointments and shareholdings in the Company or a related Corporation.
The register of substantial shareholders. This register would provide information on persons interested in not less than 5% of the voting shares in the Company and the extent of their interest.
The register of debenture holders and the register of charges. These registers provide particulars of debenture holders to whom the Company has issued debentures and information relating to most forms of security granted by a Company to secure obligations of the Company.
The minute book containing all of the general meetings can be inspected by a shareholder of the Company. However, a shareholder does not have the right to inspect the minute book containing all the meetings of the directors.
The audited financial report, auditors' report and the directors' report of the Company. These reports which provides for the financial affairs of the Company are required to be forwarded to shareholders within 14 days before the annual general meeting of the Company (‘AGM’).
The Registry of Companies. The Registry maintains a record of documents lodged with the ACRA. Copies of documents containing much of the information described above may be obtained from the Registry.
RIGHT TO ATTEND, VOTE AND CALL GENERAL MEETINGS OF THE COMPANY
A shareholder has a right to attend any general meetings of the Company and is also entitled to speak at the meetings, which are vital occasions for minority shareholders. This is where they meet and ask questions on the management of the Company. Further, shareholders (holding voting shares) are entitled to vote on any resolution being put forward. However, there is an exception in which the law allows a Company to provide in its Articles for suspension of such voting rights where calls or other sums payable by a shareholder in respect of his or her unpaid shares.
Apart from the AGM, shareholders may call for an Extraordinary General Meetings ("EGM") of a Company. Shareholders holding not less than 10% of the issued share capital, or such lesser number as provided for in the Articles, may call for an EGM. Further, resolutions may be put forward for voting if requisition is made in writing by:-
(i) shareholders holding not less than 5% voting rights, or
(ii) not less than 100 shareholders holding shares that are paid up an average sum of not less than $500.00.