Shareholders & company decision-making
Members exercise ultimate control through resolutions in general meeting or in writing. SQE1 tests the resolution thresholds, meeting procedure and the statutory routes by which shareholders challenge those in control.
What "Shareholders & company decision-making" covers
- An ordinary resolution needs a simple majority over 50% (s.282); a special resolution needs at least 75% (s.283).
- A private company may pass written resolutions instead of holding a meeting; the required majority is measured against total voting rights of eligible members (ss.288-300), and it cannot remove a director or auditor.
- General meetings require 14 clear days' notice (s.307); short notice needs the agreement of a majority in number of the members who together hold at least 90% (private) or 95% (public) of the nominal value of the voting shares.
- Only public companies must hold an AGM (s.336); public company AGMs need 21 days' notice.
- Members holding at least 5% of paid-up voting capital may require the directors to call a general meeting (s.303).
- Voting is initially on a show of hands (one member one vote) unless a poll is demanded, when votes attach to shareholding.
- Minority protection routes: an unfair prejudice petition (s.994), a statutory derivative claim brought on the company's behalf (ss.260-264), and a just and equitable winding up (s.122(1)(g) IA 1986).
Key cases & statutes
The authorities and provisions most likely to matter for this subtopic:
How it's tested in SQE1
SQE1 uses single best answer questions: a short factual scenario, one precise question, and five options of which only one is the best answer on the law applied to the facts. For shareholders & company decision-making, expect to be asked what the correct legal position is, what a party may or must do, or which outcome follows — with more than one option looking arguable. Reading the facts carefully and eliminating the near-misses is the skill that earns the mark.
Where candidates lose marks
- Miscalculating written resolution majorities — they are based on total eligible voting rights, not just those who respond.
- Mixing up board decisions (management, by directors) with member decisions (constitutional matters requiring a resolution).
- Treating unfair prejudice and just and equitable winding up as interchangeable; winding up is a last resort and O'Neill sets a high bar for unfairness.
Learn this subtopic in the course
A video lesson, notes and exam-style practice on shareholders & company decision-making.
FAQ
Is shareholders & company decision-making tested on SQE1?
Yes — shareholders & company decision-making is part of the SQE1 Business Law and Practice syllabus (FLK1) and can appear in single best answer questions.
How is shareholders & company decision-making examined in SQE1?
SQE1 tests it by application: you're given a realistic scenario and choose the single best answer from five options. The focus is on using the law correctly, not reciting it — knowing the leading authorities (s.282 CA 2006, s.283 CA 2006) helps.