Thursday, December 19, 2013

Members’ proxy time limits in CA 2006 articles

We have recently noticed a particular term in some versions of Companies Act 2006 Articles that is both contradictory and, frankly, barking!

Section 327(2) of the Companies Act 2006 says that any term in the Articles that requires members’ proxies to be sent to the company, or anyone else, more than 48 hours before a meeting in order to count for voting, is void in respect of that time limit.

Article 45(d) of the standard Companies Act Table A Articles available from Companies House says that a proxy is only valid if it “is delivered to the company in accordance with the Articles and any instructions contained in the notice of the general meeting to which they relate.” Since most IPs tend to have standard documents that require proxies to be delivered by noon the day before the meeting, or even right up to the meeting in MVLs, this is not a problem with standard Table A Articles.  

However, we have recently seen a set of longer Articles which appear to be standards written by solicitors and used by one or more company formation agents that have a significant difference. Apart from being much longer (they run to some 75 Articles rather than the 53 in standard Table A Articles), they have an extra requirement that the proxies cannot be delivered less than 48 hours before the meeting they relate to. Rather oddly, because they cannot require the proxies to be delivered more than 48 hours early, this effectively means that the Articles require the notice to say that proxies must be delivered exactly 48 hours before the meeting; not more and not less!

The real reason for raising this is not to make fun of the drafters of that set of Articles, but to raise awareness of the very real risk that you may not be able to use your usual “12 noon on the business day before the meeting”, or "up to the time of the meeting" wording for members’ meetings where those Articles apply. As a result, please check the Articles of the cases you are dealing with in detail. We have always recommended checking Articles for notice and quorum provisions and this is just another reason to review them before you prepare your members’ meeting documents.