Decision-making processes within private limited companies in England Essay

Decision-making processes within private limited companies in England and Wales - Essay Example According to Section 14 of the companies Act 1985, the registered memorandum of association and articles of association bind members and the company and are assumed to have been signed and sealed by each member thus all members must observe the provisions of the covenant (Grier, Griffin and Capper, 1998). In the case of Wood v. Odessa Waterworks (1889), the judge clarified that the articles of association not only constitute a contract between the shareholders and the company but also a contract between each individual shareholders (Bretagne, 2005). Companies Act 2006 made significant changes to the old Companies Act 1985 especially on the proceedings and governance of Private limited companies. Table A of the Companies Act 1985 was replaced with Model Articles of Association for the private limited companies and public limited companies that are contained in Companies Act 2006 (Griffin, 2006). The model articles took effect on 1 October 2009 thus making it possible to take advantage of benefits offered by Companies Act 2006. For instance, private limited companies incorporated before 1 October 2009 can continue with their previous articles of association or amend the articles in order to exclude the requirement of having to hold annual general meetings and employing a company secretary (Birds, 2010). Another significant change brought about in the decision-making of private limited companies in England and Wales is the removal of the previous statutory ‘cap’ on the authorized share capital (Lacy, 2002). ... e sets of model articles for public and private companies limited by shares and set model articles for the companies limited by guarantee (Clayton, 2008). The private limited companies are no longer required to have a company secretary. However, the companies can decide to appoint a secretary and his authority should be equivalent to that of a secretary of a public limited company (Hannigan, 2012). Such appointment must be notified to registrar of companies and records filed in the company’s register of secretaries. According to the previous law that was in force recently, Company Act 1985 required the directors to appoint the secretary, determine the remuneration and remove the secretary from office (Davies, 2010). The current law has simplified the decision-making process through removing the previous statutory requirement of holding an annual general meeting (Kershaw, 2012). The current law makes it possible to make decisions through written resolutions. In the previous 198 5 Act, private limited companies were required to hold annual general meetings (AGMs), but the current law gives the members the flexibility to determine whether to hold AGMs or or make critical decisions through written resolutions (Grier, 2009). However, members that hold 10 percent of the voting rights can go ahead and request for an annual general meeting (AGM). Under the previous law, the written resolutions required unanimous consent of all members unlike the current law provides that normal rule for ordinary and special resolutions will apply to written resolutions and a simple or 75 percent majority will be sufficient to pass the written resolutions. Part 13 of Resolutions and Meetings in companies Act 2006 sets a statutory minimum period of notice of general meetings to 14 days, but