Passing a special resolution.

[pewe]

My understanding is that:

- to change the Articles of a company requires a Special Resolution.
- to pass a Special Resolution needs 75% of the votes, either of those attending a meeting, or of all shareholders if a postal vote.

With covid, meetings will not be advisable for some time yet, and even then may not be received well by shareholders,

Zoom type virtual meetings are common now but are not practical for large numbers of people. An alternative form of 'Virtual meeting' is to use a Forum on the internet. Not widely done at present, but a very flexible and convenient way of dealing with shareholders on all sorts of issues.

Here is a scenario
- we (the Directors) notify all shareholders (58 in total) that in the Shareholders online forum we have placed a detailed account of what changes we recommend to the Articles, along with is a facility to vote. Only 32 visit the forum and vote, of which 25 vote for and 7 against the resolution.

In your opinion, is the vote carried because over 75% visiting and voting agreed, or is the resolution not passed because less than 75% of the total Shareholders did not vote for it - despite the fact that 26 shareholders did not bother to visit the forum (attend the virtual meeting) having had written notification of the matter having been placed on it.

An unusual scenario I agree, but one which may be more common in future.

[ULA]

How were the shareholders notified of the "Virtual meeting"?
Was the requisite notice given for the meeting?
Were the shareholders directly notified that this "virtual meeting" was to pass a special resolution to change the articles?

[pewe]

The Special Resolution has not happened yet.

The forum is a closed facility and accessible to the Shareholders of the Company only.
The Company is an Estate Management Company owned by the owners of the 58 homes on the estate, and the Directors are some of those 58 Shareholders.

Here is how we see the Special Resolution being facilitated.

- The Special Resolution is drawn up.
- Shareholders are notified by hand delivered letter that in 3 weeks (the specified notice period for a meeting) the Document will be placed on the forum
- They are asked to log on to the forum to read the special resolution and post any questions once they have done so
- A voting facility is opened on the forum at the same time as the document is placed and shareholders will have been notified of this and that it will close 24 hours later.
- Anyone not logging in to the forum is deemed to have not attended the (Virtual) meeting.
- The votes will be counted after the time allocated for closure.
- Of the votes cast on the forum, if 75%+ vote in favour, the Special Resolution is passed.

If any shareholders failed to log in, they are deemed to have been notified and not attended the Virtual Meeting in the same way as if the had not attended a physical meeting.

Is there any flaw in this potential procedure.

[ULA]

I think your process is good.

I am all about belt and braces given this is uncharted territory I would suggest that you when you notifiy the shareholders by letter you make it clear that:

1. This virtual meeting with voting open for 24 hours is in place of an open meeting due to the restrictions of Covid and in the interest of the safety of all shareholders and to comply with government guidelines.
2. If any shareholder has an objection with the process they should notify xxx within 48 hours of receipt of the letter.

The following points from your post, if you are not already doing so, should be included in the letter so that everyone is clear on the process.

- Anyone not logging in to the forum is deemed to have not attended the (Virtual) meeting.
- The votes will be counted after the time allocated for closure.
- Of the votes cast on the forum, if 75%+ vote in favour, the Special Resolution is passed

[pewe]

The Special Resolution has not happened yet.

The forum is a closed facility and accessible to the Shareholders of the Company only.
The Company is an Estate Management Company owned by the owners of the 58 homes on the estate, and the Directors are some of those 58 Shareholders.

Here is how we see the Special Resolution being facilitated.

- The Special Resolution is drawn up.
- Shareholders are notified by hand delivered letter that in 3 weeks (the specified notice period for a meeting) the Document will be placed on the forum
- They are asked to log on to the forum to read the special resolution and post any questions once they have done so
- A voting facility is opened on the forum at the same time as the document is placed and shareholders will have been notified of this and that it will close 24 hours later.
- Anyone not logging in to the forum is deemed to have not attended the (Virtual) meeting.
- The votes will be counted after the time allocated for closure.
- Of the votes cast on the forum, if 75%+ vote in favour, the Special Resolution is passed.

If any shareholders failed to log in, they are deemed to have been notified and not attended the Virtual Meeting in the same way as if the had not attended a physical meeting.

Is there any flaw in this potential procedure.

Thank you for your view, and the added suggestions are greatly appreciated and will be incorporated in the process.

The previous directors of our Management Company have always had problems with low attendance at meetings, and as a result any issues requiring a vote by Members (shareholders) never resulted in total votes of over 35%.

As meetings take some effort to organise, suitable venues are not cheap, they have to be run in the evening/weekends (most members are working) etc, if we apply this process and it works well for the Special Resolution, we may decide to adopt it to replace all future meetings.

[ULA]

Sounds like a good plan particularly if there are few or no objections to the process.