Can My Mum Vote Against Her Interests as a Director in the Company?

Question from pop, Can My Mum Vote Against Her Interests as a Director in the Company?

Answer from AI:

The situation involving your family’s company raises several concerns regarding corporate governance and compliance with legal standards. Here’s a structured summary of the key issues and considerations:

1. Unilateral Decision-Making by Your Uncle

• Issue: Your uncle is making decisions without board approval, such as stopping your mum’s salary and dividends.
• Consideration: Under UK company law, significant decisions should be made by the board collectively. Unilateral actions may breach the company’s Articles of Association and directors’ duties.

2. Hiring a Solicitor Without a Board Vote

• Issue: The Articles require a board vote to hire a solicitor, but this hasn’t happened.
• Consideration: This could be a breach of the company’s governance procedures. The solicitor’s appointment might be invalid if not properly approved.

3. Annual General Meeting (AGM) Notice and Voting

• Issue: An AGM was called after five years, with matters including voting on a solicitor for a dispute involving your mum.
• Consideration:
  • Voting Conflict: If your mum is a director and the subject of the dispute, she should abstain from voting to avoid a conflict of interest.
  • Quorum and Majority: With four directors, if your mum abstains, the remaining three (you, uncle, cousin) would decide. A tie could prevent the resolution from passing.

4. Access to Company Accounts

• Issue: Accounts are withheld until the AGM.
• Consideration: Directors have a right to access financial information. Withholding accounts may be unfair and contrary to good governance, though not necessarily illegal.

5. Legal and Procedural Recommendations

• Legal Advice: Your mum’s solicitor should review whether the company is adhering to its Articles and UK law, particularly regarding board decisions and solicitor appointments.
• AGM Legitimacy: Ensure the AGM is properly convened and that voting processes are fair, especially given your mum’s position as a director and ex-employee.
• Director Rights: Emphasize the importance of directors’ access to company information for informed decision-making.

Conclusion

The company’s actions may not comply with its Articles or UK law, particularly in areas of decision-making and transparency. Legal advice is essential to address these issues and ensure proper governance. Consulting with a solicitor can help navigate the complexities and protect the interests of all directors involved.