|
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 its 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 212 of the
Companies Act 1985 (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 10 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 them 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:
which is in favour
of more than four joint holders; or
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 1995 (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, they 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 10 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 fees 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
Provisions
of the legislation which, read with the Articles, would
prevent a person from being or becoming a director because
that person has reached the age of 70 do not apply to
the company.
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, shall 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.
|
