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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.
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.
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).
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.
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
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| (ii) |
with
the consent in writing of the holders of at least 75% in
nominal value of the issued shares of that class.
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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.
The company may by ordinary
resolution:
| (i) |
consolidate
and divide all or any of its share capital into shares of
a larger amount;
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| (ii) |
divide
all or part of its share capital into shares of a smaller
amount;
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| (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
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| (iv) |
increase
its share capital.
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The company may also:
| (i) |
buy
back its own shares; and
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| (ii) |
by
special resolution reduce its share capital, any capital
redemption reserve and any share premium account.
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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
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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.
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:
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which
is in favour of more than four joint holders; or
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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.
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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, 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
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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
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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
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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.
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.
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.
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);
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| (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);
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| (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
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| (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.
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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.
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.
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Directors’
borrowing powers
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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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