1. Membership
1.1. Administration
1.1.1. All companies required to have at least one member (s20A)
1.2. Definition
1.2.1. subscribes to the memorandum at the time the company is incorporated (s 19(6)
1.2.2. S19(6A) provides that every other person who agrees to become a member of the company and whose name is entered- - In the case of a public company, in the register of members kept such a company, or - In the case of a private company, in the electronic register of members kept by the Registrar under S 196A
1.2.3. for listed companies whose shares are electronically traded, if their names appear on the Central Depository (CDP) register as a ‘depositor’ of the relevant shares (s130A-P)
1.3. How to become a member?
1.3.1. Being an initial subscriber to the company's constitution during its incorporation
1.3.2. Subsequently becoming a member after the company has been incorporated (in the case of companies with share capital. This may be effected thru the subscription of new shares issued by the company thru the purchase of already issued shares.
1.3.3. Issue of partly paid shares
1.3.4. Public traded companies
1.3.4.1. Initial Public Offering (IPO)
1.3.4.2. Rights issue (renounceable/non renounceable)
1.3.4.3. Bonus issues Options
1.4. Ownership
1.4.1. Legal
1.4.1.1. name in register of members = legal owner
1.4.2. Beneficiall
1.4.2.1. lawfully able to enjoy rights and benefits ; may or may not be member
1.5. Members' rights
2. Shares Bundle of rights which the shareholders have against the company as reflected in the Companies Act and the company's consistution.
2.1. Classes (different classes = different rights)
2.1.1. How to create
2.1.1.1. In constitution(e.g preference shares)
2.1.1.2. Resolution at a general meeting
2.1.1.3. In terms of the issue approved by general meeting resolution (e.g Regulation 7(2))
2.1.2. Types
2.1.2.1. Ordinary
2.1.2.2. Preference shares (s75): rights must be set out in Constitution
2.1.2.2.1. Preference to dividends (fixed(usually)) - Cumulative/non-cumulative
2.1.2.2.2. Redeemable preference shares (s70)
2.1.2.2.3. Preference to return of capital upon winding up
2.1.2.2.4. Usually issued with no voting rights for company meetings
2.1.2.2.5. Usually with no "participatory rights" -convertible preference shares
2.1.3. Amendment of class rights
2.1.3.1. How To: procedure must be followed in addition to any other procedure necessary to effect the amendment (regulation 8)
2.1.3.1.1. Where the rights are contained in the regulation, by amendment of the relevant Regulation
2.1.3.1.2. Where the rights are created by members resolution, by passing an appropriate amending resolution
2.1.3.2. When is act regarded as affecting/(or varying) "class rights"?
2.1.3.2.1. E.g Greenhalgh v Arderne Cinemas Ltd
2.1.3.2.2. 74(7) – amendment of a MOR clause itself is deemed as a variation of class rights – Implications: • need to follow the procedure in the clause itself to amend it • s74(1) applies
2.1.3.2.3. Deemed variation
2.1.3.2.4. X holds simple majority of preference shares but the bulk of ordinary shares. • X should only exercise his vote at a preference s/h class meeting for the benefit of that class as a whole. • He should not use voting power as preference s/h to do something at a preference s/h class meeting for the purpose of giving himself an advantage as an ordinary shareholder at the expense of preference shareholders (eg vote to change the preference rights from cummulative to non-cummulative so that ordinary shares can receive more dividends when company is profitable)
2.1.3.2.5. S75(1) : No company shall allot any preference shares or convert any issued shares into preference shares unless they are set out in its constitution the rights of the holders of those shares with respect to repayment of capital, participation in surplus assets and profits, cumulative or non-cumulative dividends, voting and priority of payment of capital and dividend in relation to other shares or other classes of preference shares.
2.1.3.2.6. Public company
2.1.3.3. 74(1)-(5): Right of affected s/h to apply to court for relief min 5% of issued shares of the relevant class court to consider whether variation is unfairly prejudicial to the class of shareholders
2.1.4. Conversion
2.1.4.1. Constitution may provide for conversion ( s 74A(1)
2.1.4.1.1. Public company
2.1.4.1.2. Private company
2.1.4.1.3. Exception