MKT 9.3 MKT 9.3 Directors' duties and fair treatment of Shareholders
MKT 9.3.1 MKT 9.3.1(1) This section applies, subject to (2), to:(a) the Board of a Reporting Entity in respect of Shares; and(b) each individual Director who is a member of such a Board.(2) The requirement in Rule 9.3.3 applies to every Reporting Entity.
Guidance1. Where a Person referred to in Rule 9.3.1(1) is required under any legislation applicable to such a Person to comply with a similar or more stringent requirement than the requirements in this section, compliance with those other requirements would be sufficient compliance for the purposes of the relevant requirement in this section.2. For example, in the case of a reduction of Share capital, more stringent procedures such as a special resolution (i.e. a vote of at least 75% of the Shareholders in voting) may be required under the Company law or other legislation applicable to a Reporting Entity in its jurisdiction of incorporation. Where this is the case, compliance with the more stringent requirements applicable to the Reporting Entity suffices for the purposes of compliance with the requirements in this section dealing with a Shareholder approval by simple majority in Rule 9.3.8.
MKT 9.3.2 MKT 9.3.2
A Director of a Reporting Entity must act:(1) on a fully informed basis;(2) in good faith;(3) honestly;(4) with due diligence and care; and(5) in the best interests of the Reporting Entity and its Shareholders.
In order to meet the obligation to act with due diligence and care, a Director should (amongst other things) ensure that he has enough time and capacity available to devote to the job. See also the best practice standards in APP 4 which apply to Directors of Reporting Entities who are subject to the Corporate Governance Principles.
Equality of treatment
The Board of a Reporting Entity must ensure equality of treatment of all holders of Securities of a particular class or type in respect of all rights attaching to the Securities of that class or type of Securities.
Reduction of Share capital
The Board of a Reporting Entity must ensure that a Reporting Entity does not purchase its own Shares unless:(1) the purchase does not materially prejudice the Reporting Entity's ability to pay its creditors as they fall due;(2) it has obtained prior approval of Shareholders in meeting by a majority vote; and(3) prior to the meeting seeking the consent referred to in (2), the notice of the meeting and any accompanying documents relating to the purchase is filed with the Regulator.
The Board of a Reporting Entity must, except where otherwise provided in the constituent documents of the Reporting Entity, ensure that a Reporting Entity provides pre-emption rights under which, on an issue of Shares by the Reporting Entity for cash, the Shareholders of the Reporting Entity are offered any Shares to be issued in proportion to their existing holdings prior to the Shares being offered to third parties, unless there is prior approval of the issue of Shares without pre-emption rights by Shareholders in meeting, by a majority vote.
Communications with Shareholders
MKT 9.3.6 MKT 9.3.6(1) The Board of a Reporting Entity must ensure that all the necessary information and facilities are available to its Shareholders to enable them to exercise the rights attaching to their Shares on a well-informed basis.(2) Without limiting the generality of the obligation in (1), the Board must ensure that the Shareholders:(a) are provided with the necessary information relating to the matters to be determined at meetings to enable them to exercise their right to vote, including the proxy forms and notice of meetings; and(b) have access to any relevant notices or circulars giving information in relation to the rights attaching to the Securities.
In adhering to its obligations in (2)(b), the Board must comply with the time periods for giving such notices outlined in section 324 of the Companies Regulations 2015.
The Board of a Reporting Entity must ensure that for each meeting at which Shareholders are eligible to exercise voting rights attaching to their Securities, each Shareholder is given the right and means to vote by proxy.
Other matters requiring Shareholder approval
MKT 9.3.8 MKT 9.3.8(1) The Board of a Reporting Entity must, subject to (2), ensure that a majority of Shareholders in voting approves:(a) any alteration of the constitutional documents of the Reporting Entity including any alteration to the memorandum of association, articles of association, bylaws or any other instrument constituting the Reporting Entity;(b) an alteration of the issued Share capital, for example Share reductions or Share consolidations, of the Reporting Entity which is more than 20% of the existing issued Share capital;(c) any acquisition or disposal of an asset of the Reporting Entity where the value of the asset involved is 25% or more of the value of the net assets of the Reporting Entity as at its last published financial reports;(d) the appointment or removal of a Director of the Reporting Entity and the terms of such appointment;(e) the appointment or removal of the auditor of the Reporting Entity;(f) the placing of the Reporting Entity into voluntary liquidation;(g) the reduction of the Share capital of the Reporting Entity, in accordance with Rule 9.3.4(2);(h) the issuance of Shares without pre-emption rights, in accordance with Rule 9.3.5;(i) a Related Party Transaction that falls within Rule 9.5.3(1) or (3);(j) any creation or issuance of new securities;(k) the appointment of the Chief Executive as the chairman of the Board; and(l) any purchase by a Listed Entity of its own Securities, where requested to provide such approval in accordance with Rule 2.7.5(1).(2) The requirement in (1) does not apply, subject to any requirements in the constitutional documents of the Reporting Entity, in relation to the appointment or removal of a Director or auditor of a Reporting Entity in circumstances where the immediate appointment or removal is necessary in the interests of the Reporting Entity.
Guidance1. Under Rule 9.3.8(1)(b), an increase in the issued Share capital of a Reporting Entity which results in an increase of more than 20% of its current Share capital requires Shareholder approval regardless of whether or not such an increase is within the authorised capital of the relevant Reporting Entity.2. The circumstances in which the immediate removal of a Director or auditor may become necessary include matters affecting that Person's fitness and propriety, such as professional misconduct of such a Person.