Shareholders have ultimate control of a company. However the directors run the company's business and are responsible for its management. In general shareholders cannot interfere, although they can appoint and remove directors.
To pass a special resolution, 75% of shareholders must vote in favour of it. Consequently, a minority shareholder or shareholders holding more than 25% of a company’s shares can block a special resolution, which is required to make substantive alterations to the operation of a company, including:-
- changes in the company’s name Memorandum of Articles of Association
- reducing share capital
- voluntary liquidation
- issuing shares otherwise than in accordance with existing pre-emption rights.
Other shareholders' resolutions require only a simple majority, i.e. more than 50% voting in favour.
The Companies Act 2006 (CA 06) gives some protection to minority shareholders. However it is always preferable to have a shareholders' agreement, which can include more extensive and effective minority protection.
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