ROC Updates on Preference Shares, Members’ Resolutions by One-Member Public Company and Solvency Statement for Reduction of Capital
13 August 2019
The Registrar of Companies updated Part N
and Part O
of its Frequently Asked Questions on the Companies Act 2016 and Transitional Issues (“FAQs”) on 7 August 2019 in relation to voting rights of preference shareholders, passing of a members’ resolution by a one-member public company, and the form of solvency statement for reduction of capital.
1. Preference Shares
A new Question 1 of sub-part (iv) of Part N of the FAQs has been introduced.
The new Question 1 suggests that although a preference share is not permitted to carry voting rights as that of an ordinary share, a preference share may carry voting rights on matters relating to their respective class rights provided that such rights are set out in the company’s constitution as required under section 90(4) of CA2016.
Section 90(4) of the Companies Act 2016 (“CA2016”) stipulates, inter alia, that a company that allots any preference shares, or converts any issued shares into preference shares, shall set out the rights of the preference shareholders in its constitution with respect to repayment of capital, participation in surplus assets and profits, cumulative and non-cumulative dividend, voting and priority of payment of capital and dividend in relation to other shares or other classes of preference shares.
2. Members’ Resolution by One-Member Public Company
A new fifth paragraph has been added to Question 3 of sub-part (i) of Part O of the FAQs.
This new paragraph clarifies that a public company which has only one member cannot make a decision by way of a members’ written resolution pursuant to section 344 of CA2016 by reason that a members’ written resolution under section 297 of CA2016 can only be proposed by the board or a member of a private company.
Section 344 of CA2016 provides, inter alia, that a sole member of a company who takes any decision that may be taken only by the company in a members’ meeting and has the effect as if agreed by the company in a members’ meeting, shall provide the company with details of that decision, unless that decision is taken by way of a written resolution.
In other words, a public company having only one member must convene physical meetings to pass any members’ resolution. It must also prepare notice of meetings, attendance lists and minutes of meetings in respect of its members’ meetings.
Notwithstanding the foregoing, a sole-member of a public company may consent to short notice if the requirements set out in section 316(3) (annual general meeting) or section 316(4) (other members’ meeting) of CA2016 are satisfied.
3. Reduction of capital
A new Question 1 of sub-part (v) of Part N of the FAQs has been introduced.
The new FAQ states that the solvency template is provided as a guide only and a company may modify the template to suit its requirements.
The FAQ also states that a party should refer to applicable accounting standards for guidance with respect to completing the solvency statement.