The following is a summary of
the principal provisions of BT’s memorandum and articles of association
(‘Memorandum’ and ‘Articles’), a copy of which has been filed with the
Registrar of Companies.
Memorandum
The Memorandum provides that the
company’s principal objects are, among other things, to carry on any
business of running, operating, managing and supplying telecommunication
systems and systems of any kind for conveying, receiving, storing,
processing or transmitting sounds, visual images, signals, messages and
communications of any kind.
Articles
In the following description of
the rights attaching to the shares in the company, a ‘holder of shares’
and a ‘shareholder’ is, in either case, the person entered on the
company’s register of members as the holder of the relevant shares.
Shareholders can choose whether their shares are to be evidenced by share
certificates (i.e. in certificated form) or held in electronic (i.e.
uncertificated) form in CREST (the electronic settlement system in the
UK).
(a) Voting
rights
Subject to the
restrictions described below, on a show of hands, every shareholder
present in person or by proxy at any general meeting has one vote and, on
a poll, every shareholder present in person or by proxy has one vote for
each share which they hold.
Voting at any meeting of
shareholders is by a show of hands unless a poll is demanded by the
chairman of the meeting or by at least five shareholders at the meeting
who are entitled to vote (or their proxies), or by one or more
shareholders at the meeting who are entitled to vote (or their proxies)
and who have, between them, at least 10% of the total votes of all
shareholders who have the right to vote at the meeting.
No person is, unless the
Board decide otherwise, entitled to attend or vote at any general meeting
or to exercise any other right conferred by being a shareholder if he or
any person appearing to be interested in those shares has been sent a
notice under section 793 of the Companies Act 2006 (which confers upon
public companies the power to require information with respect to
interests in their voting shares) and he or any interested person has
failed to supply to the company the information requested within 14 days
after delivery of that notice. These restrictions end seven days after the
earlier of the date the shareholder complies with the request
satisfactorily or the company receives notice that there has been an
approved transfer of the shares.
(b)
Variation of rights
Whenever the
share capital of the company is split into different classes of
shares, the special rights attached to any of those classes can be
varied or withdrawn either: |
| (i) |
with the sanction of an
extraordinary resolution passed at a separate meeting of the holders
of the shares of that class; or
|
| (ii) |
with the consent in
writing of the holders of at least 75% in nominal value of the issued
shares of that class. |
At any separate meeting,
the necessary quorum is two persons holding or representing by proxy not
less than one-third in nominal amount of the issued shares of the class in
question (but at any adjourned meeting, any person holding shares of the
class or his proxy is a quorum).
The company can issue new
shares and attach any rights and restrictions to them, as long as this is
not restricted by special rights previously given to holders of any
existing shares. Subject to this, the rights of new shares can take
priority over the rights of existing shares, or existing shares can take
priority over them, or the new shares and the existing shares can rank
equally.
|
(c)
Changes in capital |
| The company
may by ordinary resolution: |
| (i) |
consolidate and divide all
or any of its share capital into shares of a larger amount;
|
| (ii) |
divide all or part of
its share capital into shares of a smaller amount; |
| (iii) |
cancel any shares which
have not, at the date of the ordinary resolution, been taken or agreed
to be taken by any person and reduce the amount of its share capital
by the amount of the shares cancelled; and |
| (iv) |
increase its share
capital. |
| The company
may also: |
| (i) |
buy back its own shares;
and |
| (ii) |
by special resolution
reduce its share capital, any capital redemption reserve and any share
premium account. |
(d) Dividends
The company’s
shareholders can declare dividends by passing an ordinary resolution
provided that no dividend can exceed the amount recommended by the
directors. Dividends must be paid out of profits available for
distribution. If the directors consider that the profits of the company
justify such payments, they can pay interim dividends on any class of
shares of the amounts and on the dates and for the periods they decide.
Fixed dividends will be paid on any class of shares on the dates stated
for the payments of those dividends.
The directors can offer
ordinary shareholders the right to choose to receive new ordinary shares,
which are credited as fully paid, instead of some or all of their cash
dividend. Before they can do this, the company’s shareholders must have
passed an ordinary resolution authorising the directors to make this
offer.
Any dividend which has not
been claimed for ten years after it was declared or became due for payment
will be forfeited and will belong to the company unless the directors
decide otherwise.
(e) Distribution of assets on winding up
If the company is
wound up (whether the liquidation is voluntary, under supervision of the
court or by the court) the liquidator can, with the authority of an
extraordinary resolution passed by the shareholders, divide among the
shareholders all or any part of the assets of the company. This applies
whether the assets consist of property of one kind or different kinds. For
this purpose, the liquidator can place whatever value the liquidator
considers fair on any property and decide how the division is carried out
between shareholders or different groups of shareholders. The liquidator
can also, with the same authority, transfer any assets to trustees upon
any trusts for the benefit of shareholders which the liquidator decides.
The liquidation of the company can then be finalised and the company
dissolved. No past or present shareholder can be compelled to accept any
shares or other property under the Articles which could give that
shareholder a liability.
(f) Transfer of shares
Certificated shares
of the company may be transferred in writing either by an instrument of
transfer in the usual standard form or in another form approved by the
Board. The transfer form must be signed or made effective by or on behalf
of the person making the transfer. The person making the transfer will be
treated as continuing to be the holder of the shares transferred until the
name of the person to whom the shares are being transferred is entered in
the register of members of the company.
The Board may refuse to
register any transfer of any share held in certificated form:
| (i) |
which is in favour of
more than four joint holders; or |
| (ii) |
unless the transfer form
to be registered is properly stamped to show payment of any
applicable stamp duty and delivered to the company’s registered
office or any other place the Board decide. The transfer must have
with it the share certificate for the shares to be transferred; any
other evidence which the Board ask for to prove that the person
wanting to make the transfer is entitled to do this; and if the
transfer form is executed by another person on behalf of the person
making the transfer, evidence of the authority of that person to do
so.
|
Transfers of
uncertificated shares must be carried out using a relevant system (as
defined in the Uncertificated Securities Regulations 2001 (the
Regulations)). The Board can refuse to register a transfer of an
uncertificated share in the circumstances stated in the Regulations.
If the Board decide not to
register a transfer of a share, the Board must notify the person to whom
that share was to be transferred no later than two months after the
company receives the transfer or instruction from the operator of the
relevant system.
The Board can decide to
suspend the registration of transfers, for up to 30 days a year, by
closing the register of shareholders. The register must not be closed
without the consent of the operator of a relevant system (as defined in
the Regulations) in the case of uncertificated shares.
(g) Untraced shareholders
BT may sell any
shares after advertising its intention and waiting for three months if the
shares have been in issue for at least ten years, during that period at
least three dividends have become payable on them and have not been
claimed and BT has not heard from the shareholder or any person entitled
to the dividends by transmission. The net sale proceeds belong to BT, but
it must pay those proceeds to the former shareholder or the person
entitled to them by transmission if that shareholder, or that other
person, asks for them.
(h) General meetings of shareholders
Every year the
company must hold an annual general meeting. The Board can call an
extraordinary general meeting at any time and, under general law, must
call one on a shareholders’ requisition.
(i) Limitations on rights of non-resident or foreign shareholders
The only limitation
imposed by the Articles on the rights of non-resident or foreign
shareholders is that a shareholder whose registered address is outside the
UK and who wishes to receive notices of meetings of shareholders or
documents from BT must give the company an address within the UK to which
they may be sent.
(j) Directors
Directors’
remuneration
Excluding remuneration referred
to below, each director will be paid such fee for his services as the
Board decide, not exceeding £50,000 a year and increasing by the
percentage increase of the UK Retail Prices Index (as defined by Section
833(2) Income and Corporation Taxes Act 1988) for any 12 month period
beginning 1 April 1999 or an anniversary of that date. The company may by
ordinary resolution decide on a higher sum. This resolution can increase
the fee paid to all or any directors either permanently or for a
particular period. The directors may be paid their expenses properly
incurred in connection with the business of the company.
The Board can award extra
fees to a director who holds an executive position; acts as chairman or
deputy chairman; serves on a Board committee at the request of the Board;
or performs any other services which the Board consider extend beyond the
ordinary duties of a director.
The directors may grant
pensions or other benefits to, among others, any director or former
director or persons connected with them. However, BT can only provide
these benefits to any director or former director who has not been an
employee or held any other office or executive position in the company or
any of its subsidiary undertakings, or to relations or dependants of, or
people connected to, those directors or former directors, if the
shareholders approve this by passing an ordinary resolution.
Directors’
votes
A director need not be a
shareholder, but a director who is not a shareholder can still attend and
speak at shareholders’ meetings.
Unless the Articles say
otherwise, a director cannot vote on a resolution about a contract in
which the director has a material interest (this will also apply to
interests of a person connected with the director). The director can vote
if the interest is only an interest in BT shares, debentures or other
securities. A director can, however, vote and be counted in a quorum in
respect of certain matters in which he is interested as set out in the
Articles.
Subject to the relevant
legislation, the shareholders can by passing an ordinary resolution
suspend or relax, among other things, the provisions relating to the
interest of a director in any contract or arrangement or relating to a
director’s right to vote and be counted in a quorum on resolutions in
which he is interested to any extent or ratify any particular contract
carried out in breach of those provisions.
Directors’ interests
If the legislation allows
and the director has disclosed the nature and extent of the interest
to the Board, the director can: |
| (i) |
have any kind of interest
in a contract with or involving BT (or in which BT has an interest
or with or involving another company in which BT has an interest);
|
| (ii) |
have any kind of interest
in a company in which BT has an interest (including holding a
position in that company or being a shareholder of that company); |
| (iii) |
hold a position (other
than auditor) in BT or another company in which BT has an interest
on terms and conditions decided by the Board; and |
| (iv) |
alone (or through some
firm with which the director is associated) do paid professional
work (other than as auditor) for BT or another company in which BT
has an interest on terms and conditions decided by the Board. |
A director does not have
to hand over to BT any benefit received or profit made as a result of
anything permitted to be done under the Articles.
When a director knows that
they are interested in a contract with BT they must tell the other
directors.
Retirement of directors
No one is prevented from being
or becoming a director because they have reached the age of 70.
At every annual general
meeting, any director who was elected or last re-elected a director at or
before the annual general meeting held in the third year before the
current year, must retire by rotation. Any director appointed by the
directors automatically retires at the next following annual general
meeting. A retiring director is eligible for re-election.
Directors’ borrowing
powers
To the extent that the
legislation and the Articles allow, the Board can exercise all the powers
of the company to borrow money, to mortgage or charge its business,
property and assets (present and future) and to issue debentures and other
securities, and give security either outright or as collateral security
for any debt, liability or obligation of the company or another person.
The Board must limit the borrowings of the company and exercise all the
company’s voting and other rights or powers of control exercisable by the
company in relation to its subsidiary undertakings so as to ensure that
the aggregate amount of all borrowings by the group outstanding, net of
amounts borrowed intra-group among other things, at any time does not
exceed £35 billion.
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