A question that we have frequently heard from those to have used our ltd company incorporation services has been that of whether all joint shareholders are entitled to attend and speak at a given general meeting.
What is the legal position?
Section 286 of the Companies Act 2006 states that where there are joint holders of shares, only the vote of the senior holder – the first one named in the register – who votes may be counted.
It would appear to be the case, however, that with regard to joint holders of shares, each joint holder has the same right to attend and speak at a general meeting as a sole shareholder.
Section 286 puts on a statutory footing the provision that was once made by article 55 of Table A (Companies Act 1985). As is the case in section 286, article 55 makes clear that only the vote of the senior holder is to be counted.
If it had been intended in such legislation that the ‘non-senior’ holder would also be prevented from attending and – voting aside – participating in general meetings, clear and express wording would have surely been used to remove such rights.
No such wording exists, however, whether in section 286 or elsewhere.
A lesser restriction does not imply a greater one
If, hypothetically speaking, only the senior holder was allowed to be properly admitted to general meetings, this point would have been stated first. It could then be assumed from this that the non-senior holder would not be able to properly vote either, at least in person.
In other words, had it been expressly stated in the aforementioned acts that only the senior member was allowed to attend meetings, it could be argued that it was implicit that only the senior member was allowed to vote as well.
However, it cannot be said that simply because a lesser restriction on the ability to vote exists, a greater restriction on the ability to attend also applies. Indeed, one could argue that section 286 or article 55 specifically requiring the non-senior holder’s vote to be disregarded implies the potential presence of the non-senior holder at the general meeting.
Deciding how the senior holder’s vote is to be exercised
As far as voting is concerned, it is clear what the issue is: only one joint holder can be permitted to vote, so there needs to be some means of deciding which person this will be. However, it does not follow that the presence of more than one joint holder at the same meeting is inherently objectionable in the same way.
Indeed, joint holders may well wish to consult with each other prior to deciding how the senior holder will exercise their vote in person at a given meeting.
For further advice and support in relation to ltd company incorporation and other elements of corporate governance and back-office compliance, don’t hesitate to call the London Registrars team today on 020 7608 0011.