ACCA Applied Skills · Corporate and Business Law (Global) · Company meetings and resolutions
Orlin Co wishes to pass a resolution at a general meeting that the articles say requires an extraordinary resolution-style approval of 90% of votes cast. The company's articles set this higher threshold for selling the main business. Which statement is correct?
The 90% threshold in the articles must be met. Statutory majorities for ordinary and special resolutions are minimum requirements, and a company's constitution can require a higher majority for particular decisions, which then binds the members voting on the sale.
- AThe articles cannot require a higher majority than 75%
- BThe higher threshold in the articles must be met for the sale to be approvedCorrect
- CA simple majority is enough because the law overrides the articles
- DThe threshold applies only to directors' votes
Explanation
Where the articles impose a higher majority for a particular decision, the company must meet it, as the statutory majority is a minimum. Companies may entrench stricter requirements in their constitution. The articles do not reduce the legal minimum but may increase it.
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