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ICSAN Secretarial Practice practice questions

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Question 1Company formation, types of companies and constitutional documents

Under the Companies and Allied Matters Act, which document constitutes the primary constitution of a company and governs the relationship between the company and its members?

  1. The pre-incorporation contract
  2. The memorandum and articles of association Correct answer.
  3. The memorandum of association
  4. The certificate of incorporation

Explanation

The constitution of a Nigerian company comprises both the memorandum and the articles of association taken together. The memorandum fixes the company's name, objects, share capital and liability of members, while the articles regulate internal management. Neither document alone is described as the company's constitution.

Question 2Company formation, types of companies and constitutional documents

A promoter signs a contract on behalf of a company that has not yet been incorporated. After incorporation, the company wishes to adopt the contract. What is the correct legal position?

  1. The contract is void and cannot be enforced by anyone
  2. The company may adopt it by entering into a fresh contract or novation Correct answer.
  3. The contract is automatically binding on the company upon incorporation
  4. The contract binds the company only if the promoter was a director

Explanation

A company cannot be bound by a pre-incorporation contract because it did not exist when the contract was made. It may however adopt the benefit of such a contract by novation or by entering into a new contract on the same terms. Until adoption, the promoter remains personally liable on the contract.

Question 3Company formation, types of companies and constitutional documents

Which type of company may be formed with only one member under Nigerian company law?

  1. A private limited company Correct answer.
  2. An unlimited company
  3. A public limited company
  4. A company limited by guarantee

Explanation

A private company may be incorporated with as few as one member, and a single-member company is expressly permitted. Public companies require a minimum of two members. This makes the private company the appropriate vehicle for sole proprietors wishing to incorporate.

Question 4Company formation, types of companies and constitutional documents

A group of professionals wishes to incorporate a company limited by guarantee for charitable purposes. Which feature distinguishes this type of company from a company limited by shares?

  1. It has a share capital divided into shares
  2. It cannot own property in its own name
  3. It must be registered as a public company
  4. It prohibits the payment of dividends to members Correct answer.

Explanation

A company limited by guarantee has no share capital and its members' liability is limited to the amount they undertake to contribute on winding up. Profits or income cannot be distributed to members as dividends; they must be applied to the company's objects. This structure suits charities, clubs and professional associations.

Question 5Company formation, types of companies and constitutional documents

Two promoters wish to register a company whose name includes the word 'Chartered'. What is the correct procedure before the name can be approved by the Corporate Affairs Commission?

  1. No special consent is needed once the name is available
  2. Written consent of the relevant professional body must be obtained Correct answer.
  3. The promoters must deposit the entire share capital with the Commission
  4. The company must first be incorporated under a different name

Explanation

Words such as 'Chartered', 'Chamber of Commerce' and certain regulated terms require the consent of the appropriate professional or regulatory body before the Commission will approve the name. The reservation process therefore includes obtaining and filing that written consent. Approval is discretionary and not automatic.

Question 6Company formation, types of companies and constitutional documents

Which of the following statements correctly describes the doctrine of separate legal personality as it applies to a registered company?

  1. The company is a legal person distinct from its members and directors Correct answer.
  2. The company ceases to be a separate person once it begins trading
  3. The company is an agent of its shareholders in all transactions
  4. The company's liabilities are always attributed to its promoters

Explanation

On incorporation, a company becomes a body corporate with a legal personality separate from its members and officers. It can own property, sue and be sued, and incur debts in its own name. This principle, established in Salomon v Salomon, is the foundation of limited liability.

Question 7Company formation, types of companies and constitutional documents

A company's articles of association contain a clause restricting the transfer of shares. A member wishes to sell his shares to an outsider. What is the effect of the clause?

  1. The clause is binding and the transfer must comply with it Correct answer.
  2. The clause applies only to transfers to existing members
  3. The clause is void because shares are freely transferable
  4. The clause lapses automatically after one year

Explanation

The articles constitute a contract between the company and its members, and restrictions on share transfer contained in them are enforceable. A member seeking to transfer shares must comply with the pre-emption or approval mechanism in the articles. A transfer made in breach of the restriction is not validly registered.

Question 8Company formation, types of companies and constitutional documents

Which document must a company deliver to the Corporate Affairs Commission along with its application for registration, setting out its name, objects and share capital?

  1. The memorandum of association Correct answer.
  2. The notice of registered address
  3. The annual return
  4. The statutory declaration of compliance

Explanation

The memorandum of association is the constitution document that states the company's name, objects, registered office situation, liability of members and capital structure. It is filed with the articles and other incorporation documents. The annual return is filed after incorporation on a periodic basis.

Question 9Company formation, types of companies and constitutional documents

A company wishes to alter its memorandum of association to change its registered office from Lagos to Abuja. What is the correct procedure?

  1. A simple board resolution is sufficient
  2. The change takes effect immediately upon the directors' decision
  3. Approval of the Commission alone is sufficient
  4. A special resolution of members followed by filing with the Commission Correct answer.

Explanation

Alteration of the memorandum, including a change of registered office, requires a special resolution of the members and subsequent filing with the Commission. The change takes effect once the Commission registers it. The required majority for a special resolution is at least three-quarters of members present and voting.

Question 10Company formation, types of companies and constitutional documents

Which of the following is a characteristic of an unlimited company?

  1. It is prohibited from having a share capital
  2. It must have a minimum of seven members
  3. It cannot be wound up voluntarily
  4. Members' liability for the company's debts is unlimited Correct answer.

Explanation

In an unlimited company, the liability of the members for the company's debts is not limited by shares or by guarantee. Such a company may or may not have a share capital, and it may be wound up in the normal ways. It is a distinct category from companies limited by shares or guarantee.

Question 11Company formation, types of companies and constitutional documents

A company's objects clause is drafted so broadly that it permits the company to carry on any lawful business. What is the modern significance of such a clause?

  1. It exempts the company from filing annual returns
  2. It converts the company into a public company
  3. It eliminates the doctrine of ultra vires in relation to third parties Correct answer.
  4. It removes the need for a certificate of incorporation

Explanation

Under the current Act, a company may be formed for any lawful business, and the objects clause no longer restricts the company's capacity to third parties. The ultra vires doctrine therefore has limited application to dealings with outsiders, who can generally enforce transactions. The protection of members and creditors is achieved through other provisions.

Question 12Company formation, types of companies and constitutional documents

Which of the following is not a constitutional document of a company?

  1. The articles of association
  2. The certificate of incorporation Correct answer.
  3. The statement of share capital
  4. The memorandum of association

Explanation

The certificate of incorporation is conclusive evidence that the company has been registered and exists, but it is not itself a constitutional document. The constitution consists of the memorandum and articles. Supporting incorporation filings such as the statement of share capital are also not constitutional documents.

Question 13Company formation, types of companies and constitutional documents

A private company's articles provide that the company may issue shares at a discount. Is this provision valid?

  1. Yes, provided the discount does not exceed ten per cent
  2. No, because private companies cannot issue shares at all
  3. Yes, provided the members pass an ordinary resolution
  4. No, shares may not be issued at a discount except in a permitted reduction of capital Correct answer.

Explanation

Shares may not be issued at a discount to their nominal value, because that would undermine the company's capital maintenance principle. The Act permits the issue of shares at a discount only in limited circumstances connected with a reduction of capital or a court-sanctioned arrangement. A provision in the articles cannot override this rule.

Question 14Company formation, types of companies and constitutional documents

A promoter enters into a contract with a supplier on behalf of a company yet to be incorporated. The company is later incorporated but refuses to adopt the contract. Who is liable to the supplier?

  1. No one, because the contract is void
  2. The company, because it was named in the contract
  3. The supplier, because the contract was premature
  4. The promoter, because the company never adopted the contract Correct answer.

Explanation

Because the company did not exist when the contract was made, it cannot be liable unless it adopts the contract. If it declines to adopt, the promoter who purported to act for it remains personally liable. The supplier can therefore enforce the contract against the promoter.

Question 15Company formation, types of companies and constitutional documents

Which of the following statements about a company limited by shares is correct?

  1. Members are liable for the company's debts to the extent of any amount unpaid on their shares Correct answer.
  2. Members have no liability whatsoever in any circumstances
  3. Members are liable only for the amount they agreed to contribute on winding up
  4. Members are liable for all the company's debts without limit

Explanation

In a company limited by shares, a member's liability is limited to the amount, if any, unpaid on the shares held. Once shares are fully paid, the member has no further liability to contribute to the company's debts. This is the essence of limited liability for shareholders.

Question 16Company formation, types of companies and constitutional documents

A company's articles of association are silent on the procedure for calling general meetings. Which body of rules applies to fill the gap?

  1. The memorandum automatically overrides the Act
  2. The company has no power to hold general meetings
  3. The provisions of the Companies and Allied Matters Act apply by default Correct answer.
  4. The directors may choose any procedure they prefer without limitation

Explanation

Where the articles are silent on a matter, the relevant provisions of the Act apply as default rules. The Act supplies procedures for convening and conducting general meetings, including notice periods and quorum. The articles cannot displace mandatory statutory requirements.

Question 17Company formation, types of companies and constitutional documents

Which of the following best explains why the certificate of incorporation is described as conclusive evidence of incorporation?

  1. It proves that the company has complied with all tax obligations
  2. It cannot be challenged on the ground that the company's registration was irregular Correct answer.
  3. It confirms that the company has commenced business
  4. It shows that the company's shares have been fully paid

Explanation

The certificate of incorporation is conclusive evidence that the company has been duly registered and exists, even if there were procedural irregularities in the registration process. It does not, however, prove compliance with tax or capital requirements. Its function is to establish the fact of incorporation.

Question 18Company formation, types of companies and constitutional documents

Which type of company is required to have at least two directors under the Companies and Allied Matters Act?

  1. A single-member company
  2. A public company Correct answer.
  3. A small private company
  4. A company limited by guarantee

Explanation

A public company must have at least two directors, reflecting its wider shareholder base and accountability requirements. A small private company may have a single director, and a single-member company is expressly permitted. The director requirements vary with the company's classification.

Question 19Company formation, types of companies and constitutional documents

A company wishes to change its name. Which procedure must it follow under the Companies and Allied Matters Act?

  1. A unanimous written resolution of the directors alone
  2. An ordinary resolution followed by publication in a newspaper only
  3. A board resolution followed by notification to the Commission
  4. A special resolution followed by approval of the Commission and issuance of a new certificate Correct answer.

Explanation

A change of name requires a special resolution of the members and the approval of the Commission, which then issues a new certificate of incorporation reflecting the new name. The change is not effective until the Commission approves and registers it. Newspaper publication alone does not effect the change.

Question 20Company formation, types of companies and constitutional documents

Which of the following is an essential element of the articles of association of a company?

  1. The declaration of compliance signed by the promoter
  2. The internal regulations governing meetings, shares and officers Correct answer.
  3. The statement of the company's authorised share capital
  4. The company's objects clause

Explanation

The articles of association contain the internal regulations of the company, covering matters such as the conduct of meetings, the issue and transfer of shares, the appointment of officers and the keeping of accounts. The objects clause belongs to the memorandum. The articles are binding on the company and its members.

Question 21Company meetings: notices, quorum, resolutions and minutes

Under the Companies and Allied Matters Act, what is the minimum period of notice required for an annual general meeting of a public company whose articles are silent on the matter?

  1. 14 days
  2. 28 days
  3. 7 days
  4. 21 days Correct answer.

Explanation

CAMA requires at least 21 days' written notice for an annual general meeting of a public company, and the articles cannot shorten this statutory minimum. Shorter periods are permitted only for other general meetings, and even then the statutory floor applies.

Question 22Company meetings: notices, quorum, resolutions and minutes

A private company wishes to convene a general meeting on short notice. Which condition best describes the statutory safeguard that makes this lawful?

  1. The company secretary must certify that the agenda is urgent
  2. The board must pass a unanimous resolution approving the short notice
  3. Shareholders holding at least 95% of the voting rights must consent to the shorter notice Correct answer.
  4. The meeting must be held within the company's registered office

Explanation

CAMA permits short notice where shareholders holding at least 95% of the total voting rights consent, so that an overwhelming majority waives the full notice period. The consent protects minority shareholders by ensuring near-unanimous acquiescence before the statutory period is abridged.

Question 23Company meetings: notices, quorum, resolutions and minutes

Which of the following persons is entitled to receive notice of a general meeting of a company?

  1. An auditor of the company, in respect of every general meeting Correct answer.
  2. A customer who has regularly transacted business with the company
  3. A former director who resigned three years earlier
  4. A person who has merely applied for shares but whose allotment has not been approved

Explanation

The company's auditor is entitled to receive notice of, and to attend, every general meeting, and to be heard on business concerning the auditor. Notice also goes to members and directors, but not to mere applicants, customers, or former officers.

Question 24Company meetings: notices, quorum, resolutions and minutes

A notice of meeting states the date, time, and venue but omits the general nature of the business to be transacted. What is the primary legal consequence?

  1. Only special resolutions become invalid; ordinary resolutions remain valid
  2. The notice is defective, and resolutions passed on business not fairly disclosed may be invalid Correct answer.
  3. The meeting is validly convened because the agenda can be circulated at the venue
  4. The defect is cured automatically if a quorum attends

Explanation

Notice must give members enough information to decide whether to attend, so the general nature of the business must be stated. Business not fairly disclosed in the notice cannot be validly transacted, and any resulting resolution is vulnerable.

Question 25Company meetings: notices, quorum, resolutions and minutes

What is the standard quorum for a general meeting of a company with more than one member, unless the articles provide otherwise?

  1. One-third of the members or 25 members, whichever is less, present in person or by proxy; two members if the company has six or fewer members Correct answer.
  2. Members holding one-third of the issued shares
  3. Three members present in person only
  4. Five members present in person or by proxy

Explanation

Under section 256 of CAMA 2020, the default quorum is one-third of the total members or 25 members, whichever is less, present in person or by proxy. Where the company has six or fewer members, the quorum is two. The articles may provide otherwise.

Question 26Company meetings: notices, quorum, resolutions and minutes

A general meeting is convened and only one member attends. The chairman waits thirty minutes and then closes the meeting. Which statement best reflects the position?

  1. The meeting lapsed for want of a quorum and no business could be transacted Correct answer.
  2. The meeting is valid because the company secretary was present
  3. The meeting is valid if the sole attendee held proxies for other members
  4. The meeting is valid because the chairman attended

Explanation

If a quorum is not present within the time fixed by the articles, the meeting cannot validly transact business and stands dissolved or adjourned as the articles direct. The presence of the chairman or secretary does not count towards the quorum unless they are also members.

Question 27Company meetings: notices, quorum, resolutions and minutes

Which type of resolution requires the votes of members holding at least 75% of the shares voted at the meeting?

  1. An elective resolution
  2. A resolution by written means
  3. A special resolution Correct answer.
  4. An ordinary resolution

Explanation

A special resolution requires a majority of not less than 75% of the votes cast at a general meeting of which proper notice has been given. An ordinary resolution requires only a simple majority of the votes cast.

Question 28Company meetings: notices, quorum, resolutions and minutes

A company proposes to alter its articles of association. What type and majority of resolution is required?

  1. Special resolution by 75% majority Correct answer.
  2. Resolution of the audit committee
  3. Board resolution supported by the chairman
  4. Ordinary resolution by simple majority

Explanation

Alteration of the articles is one of the matters reserved for a special resolution, requiring at least 75% of votes cast. This higher threshold protects the constitutional document from being changed by a bare majority.

Question 29Company meetings: notices, quorum, resolutions and minutes

Which of the following matters may properly be transacted by an ordinary resolution rather than a special resolution?

  1. Reduction of share capital
  2. Removal of a director before the expiration of his term Correct answer.
  3. Change of the company's name
  4. Alteration of the company's objects clause

Explanation

Removal of a director before the end of his term is effected by an ordinary resolution with special notice, requiring only a simple majority. Changes of name, alterations of objects, and reductions of capital are reserved for special resolution procedures.

Question 30Company meetings: notices, quorum, resolutions and minutes

A director is to be removed before the expiry of his term. What special procedural requirement applies to the notice of the meeting?

  1. Special notice of 28 days must be given to the company Correct answer.
  2. The notice must be approved by the Corporate Affairs Commission
  3. The director must personally sign the notice
  4. The notice must be published in two national newspapers

Explanation

Removal of a director under CAMA requires special notice of 28 days to the company, and the company must send a copy to the director concerned. The director is entitled to make representations and to be heard at the meeting.

Question 31Company meetings: notices, quorum, resolutions and minutes

What is the primary function of the minutes of a general meeting?

  1. To replace the register of members
  2. To record the financial performance discussed at the meeting
  3. To constitute the notice for the next meeting
  4. To serve as the official record of proceedings and resolutions of the meeting Correct answer.

Explanation

Minutes are the official record of the proceedings and resolutions of a meeting, and when properly signed they serve as evidence of what transpired. They are not a financial report, nor do they substitute for statutory registers or notices.

Question 32Company meetings: notices, quorum, resolutions and minutes

Within what period must minutes of a general meeting be entered in the company's minute book?

  1. Within 28 days of the meeting
  2. Within 7 days of the meeting
  3. Within 14 days of the meeting Correct answer.
  4. Within 3 months of the meeting

Explanation

CAMA requires minutes of general meetings to be entered in the minute book within 14 days of the meeting. Prompt recording preserves the accuracy of the record and supports the evidential value of signed minutes.

Question 33Company meetings: notices, quorum, resolutions and minutes

Minutes of a general meeting, once signed by the chairman, have what evidential effect?

  1. They are merely persuasive and can never be relied upon in court
  2. They are conclusive proof that the meeting was validly held and the proceedings regular Correct answer.
  3. They are admissible only if countersigned by the auditor
  4. They have no evidential value until filed with the Commission

Explanation

Signed minutes are evidence of the proceedings, and where the minutes are made in accordance with the statutory provisions they are conclusive evidence that the meeting was duly convened and held and that the proceedings were regular. This protects reliance on the recorded record.

Question 34Company meetings: notices, quorum, resolutions and minutes

A member appoints a proxy to attend and vote at a general meeting. Which statement is correct regarding the proxy's rights?

  1. The proxy may vote only on a poll, not on a show of hands, unless the articles provide otherwise
  2. The proxy may vote only on procedural matters
  3. The proxy may speak and vote in the same manner as the member Correct answer.
  4. The proxy may vote only if the member also attends

Explanation

A proxy is entitled to attend, speak, and vote at the meeting, and the default rule permits the proxy to vote on a show of hands as well as on a poll unless the articles restrict this. The proxy stands in the member's shoes for the purposes of the meeting.

Question 35Company meetings: notices, quorum, resolutions and minutes

The instrument appointing a proxy must ordinarily be deposited at the company's registered office no later than what time before the meeting?

  1. 48 hours before the meeting Correct answer.
  2. At the start of the meeting
  3. 24 hours before the meeting
  4. 7 days before the meeting

Explanation

The default rule requires the proxy instrument to be deposited at the registered office not less than 48 hours before the meeting. This gives the company time to verify and record the appointments before the meeting opens.

Question 36Company meetings: notices, quorum, resolutions and minutes

A poll is demanded at a general meeting. Which statement best describes a poll as a voting method?

  1. Voting is conducted by a show of hands and counted by the chairman
  2. Each member has one vote regardless of shareholding
  3. Votes are counted according to the number of shares held or the voting rights attached Correct answer.
  4. Only directors may vote

Explanation

On a poll, votes are counted according to the voting rights attached to the shares held, so a member's voting power reflects the size of the holding. This differs from a show of hands, where each member present has one vote.

Question 37Company meetings: notices, quorum, resolutions and minutes

Who is ordinarily entitled to demand a poll at a general meeting under CAMA?

  1. Only the chairman
  2. Only the company secretary
  3. Members holding not less than one-tenth of the total voting rights, among others Correct answer.
  4. Only the auditor

Explanation

CAMA allows a poll to be demanded by members holding a specified proportion of the voting rights, commonly one-tenth, as well as by the chairman and others in defined circumstances. The right ensures that voting reflects shareholding rather than a show of hands.

Question 38Company meetings: notices, quorum, resolutions and minutes

A company wishes to pass a resolution without holding a meeting. Which form of resolution is available to a private company for this purpose?

  1. A special resolution passed by the chairman alone
  2. A written resolution signed by the requisite majority of members Correct answer.
  3. An ordinary resolution passed by the board
  4. A resolution passed by the audit committee

Explanation

A private company may pass a resolution by written means, signed by the requisite majority of members, without convening a meeting. The procedure must comply with the statutory requirements, including circulation to eligible members.

Question 39Company meetings: notices, quorum, resolutions and minutes

What is the effect of an adjourned meeting where the articles provide that if a quorum is not present within half an hour the meeting shall stand adjourned?

  1. The meeting stands adjourned to the date and time fixed by the chairman or the articles Correct answer.
  2. The meeting continues with those present
  3. The meeting is dissolved permanently
  4. The meeting is reconvened only with Commission approval

Explanation

Where the articles so provide, failure to achieve a quorum within the stipulated time causes the meeting to stand adjourned to a date and time determined in accordance with the articles. Business can then be transacted at the adjourned meeting subject to the articles.

Question 40Company meetings: notices, quorum, resolutions and minutes

Which of the following best describes the chairman's duty when a member raises a point of order at a general meeting?

  1. To ignore the point and proceed with the agenda
  2. To rule on the point of order and direct the conduct of the meeting accordingly Correct answer.
  3. To refer the point to the auditor for determination
  4. To adjourn the meeting automatically

Explanation

The chairman is responsible for the orderly conduct of the meeting and must rule on points of order, deciding whether the matter raised is proper and how the meeting should proceed. This ruling is part of the chairman's authority to keep proceedings regular.

Question 41Company meetings: notices, quorum, resolutions and minutes

A notice of meeting is sent to a member at the address shown in the register of members, but the member claims never to have received it. What is the general position?

  1. Service at the registered address is valid service, and the meeting is not invalidated by non-receipt Correct answer.
  2. The member may sue the company secretary personally
  3. The meeting is invalid because actual receipt is required
  4. The meeting must be reconvened

Explanation

Notice sent to the address appearing in the register of members is validly served, and the meeting is not invalidated merely because a member did not actually receive it. The register provides the authoritative address for service.

Question 42Company meetings: notices, quorum, resolutions and minutes

Which statement correctly distinguishes an ordinary resolution from a special resolution?

  1. An ordinary resolution requires 75%, while a special resolution requires a simple majority
  2. Both require the same majority but differ in the notice period
  3. An ordinary resolution can only be passed by written means
  4. An ordinary resolution requires a simple majority of votes cast, while a special resolution requires at least 75% Correct answer.

Explanation

The essential distinction lies in the majority required: an ordinary resolution needs a simple majority of votes cast, whereas a special resolution needs not less than 75%. The notice requirements and subject matter also differ, but the majority is the defining feature.

Question 43Company meetings: notices, quorum, resolutions and minutes

A company secretary is preparing the notice for an AGM. Which item must be included in the notice beyond the date, time, and venue?

  1. The minutes of the previous meeting
  2. The names of all shareholders attending
  3. The general nature of the business to be transacted Correct answer.
  4. The company's audited accounts in full

Explanation

The notice must state the general nature of the business to be transacted so that members can decide whether to attend and how to vote. Attaching full accounts or previous minutes is not a mandatory element of the notice itself.

Question 44Company meetings: notices, quorum, resolutions and minutes

Which person is disqualified from acting as chairman of a general meeting?

  1. A person who is not a member and has no authority under the articles Correct answer.
  2. A director who is also a member
  3. A director appointed by the board to chair
  4. A member elected by those present

Explanation

The chairman must be a person entitled to preside, normally a director or a member elected by the meeting or appointed under the articles. A person with no membership and no authority under the articles cannot validly chair the meeting.

Question 45Company meetings: notices, quorum, resolutions and minutes

A member wishes to inspect the minutes of general meetings. What is the general position under CAMA?

  1. Inspection requires a court order
  2. Members have no right to inspect minutes
  3. Members are entitled to inspect the minute book at the registered office during business hours, subject to reasonable conditions Correct answer.
  4. Only directors may inspect minutes

Explanation

Members have a statutory right to inspect the minute book of general meetings at the registered office during business hours, subject to reasonable restrictions the company may impose. The minutes are not confidential to the board alone.

Question 46Company meetings: notices, quorum, resolutions and minutes

Under CAMA, what is the minimum period of notice required for the annual general meeting of a public company, unless the articles prescribe a longer period?

  1. Seven days
  2. Twenty-eight days
  3. Fourteen days
  4. Twenty-one days Correct answer.

Explanation

Section 213 of CAMA requires at least twenty-one days' written notice for an annual general meeting of a public company, and the articles may extend but not shorten that period. Statutory notice ensures members have adequate time to study the accounts, appoint auditors, and decide whether to attend or appoint a proxy.

Question 47Company meetings: notices, quorum, resolutions and minutes

A notice convening a general meeting states the date, time and venue but omits one item of special business that the directors intend to transact. What is the consequence for that item?

  1. The item may be transacted only if every member present consents at the meeting
  2. Any resolution passed on that item is invalid because the business was not disclosed in the notice Correct answer.
  3. The item may be transacted because the meeting itself was validly convened
  4. The item may be transacted if the chairman rules that it is urgent

Explanation

A notice of meeting must give sufficient particulars of the business to be transacted so that members can decide whether to attend and how to vote. Special business not fairly disclosed in the notice cannot validly be transacted, and a resolution passed on undisclosed business is liable to be invalidated.

Question 48Company meetings: notices, quorum, resolutions and minutes

At a general meeting, the chairman proposes to count the votes by a show of hands. Which statement best describes the legal significance of that method compared with a poll?

  1. A show of hands is conclusive and cannot be displaced by a demand for a poll
  2. A show of hands counts one vote per member present in person, irrespective of the number of shares held Correct answer.
  3. A show of hands counts votes in proportion to the shares held by each member present
  4. A show of hands is the only method by which a special resolution may be passed

Explanation

On a show of hands each member present in person has one vote regardless of shareholding, so the result may not reflect the economic weight of votes. A poll, by contrast, counts votes according to the shares or voting rights held, which is why members may demand one.

Question 49Company meetings: notices, quorum, resolutions and minutes

The articles of a company provide that no business shall be transacted at a general meeting unless a quorum of members is present. A meeting is called for 10:00 a.m.; at 10:20 a.m. only two members are present, and the articles are silent on what happens next. What is the correct course?

  1. The meeting lapses permanently and a fresh meeting must be requisitioned by members holding at least 10% of the shares
  2. The meeting must proceed because a quorum was present when the meeting was called
  3. The meeting stands adjourned, and the chairman should announce the adjournment to a date fixed in accordance with the articles or, if none, by the chairman Correct answer.
  4. The two members present may co-opt additional persons to form a quorum

Explanation

Where a quorum is not present within the time fixed by the articles, the meeting is adjourned; if the articles are silent, the chairman may adjourn it to a date he determines. The requirement protects the meeting from transacting business without the minimum attendance the constitution demands.

Question 50Company meetings: notices, quorum, resolutions and minutes

A member challenges the validity of minutes that record a resolution as having been passed unanimously, when in fact a poll was demanded and a minority voted against. What is the position regarding the minutes as evidence?

  1. The minutes have no evidential value until approved by the next annual general meeting
  2. The minutes are conclusive only against directors, and any member may disregard them
  3. The minutes are prima facie evidence of the proceedings, but a member may adduce evidence to contradict an inaccurate record Correct answer.
  4. The minutes are conclusive in favour of the company against every person, so the challenge must fail entirely

Explanation

Minutes signed by the chairman are received as evidence of the proceedings, but they are not made conclusive against proof of error; a member may bring evidence to show that the record is inaccurate. This preserves the integrity of the record while allowing a challenge where the proceedings were misdescribed.