© 2025 by Michael Firth KC, Gray's Inn Tax Chambers
Contact: michael.firth@taxbar.com
Shares and shareholders
- Shareholder voting at general meeting is simply exercising own property rights, not fiduciary
"In my judgment, these submissions of counsel for the directors are correct. I think that in a nutshell the distinction is this. When a director votes as a director for or against any particular resolution in a directors' meeting, he is voting as a person under a fiduciary duty to the company for the proposition that the company should take a certain course of action. When a shareholder is voting for or against a particular resolution he is voting as a person owing no fiduciary duty to the company who is exercising his own right of property to vote as he thinks fit. The fact that the result of the voting at the meeting (or a subsequent poll) will bind the company cannot affect the position that in voting he is voting simply as an exercise of his own property rights." (Northern Counties Securities Ltd v. Jackson & Steeple Ltd [1974] 2 All ER 625 at 635, Walton J)
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MANAGEMENT OF COMPANY AFFAIRS​​
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- Shareholders' power to direct by special resolution
"(1) The shareholders may, by special resolution, direct the directors to take, or refrain from taking, specified action.
(2) No such special resolution invalidates anything which the directors have done before the passing of the resolution." (Private Model Article, Article 4)
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REMOVAL OF DIRECTORS​​
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- Power cannot be exercised by written resolution
"​(1)In the Companies Acts a “written resolution” means a resolution of a private company proposed and passed in accordance with this Chapter.
(2)The following may not be passed as a written resolution—
(a)a resolution under section 168 removing a director before the expiration of his period of office;
(b)a resolution under section 510 removing an auditor before the expiration of his term of office." (CA 2006, s.288)
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- Court exercising discretion to call general meeting to allow majority shareholder to remove director
"[54]...In my judgment, the judge's exercise of his discretion is unimpeachable in this court. The shareholders have a statutory right to remove a director by ordinary resolution under section 168 of the 2006 Act. Section 168 thus reflects the statutory policy that shareholders should be able to remove a director by ordinary resolution. Section 168 does not override provisions as to the convening or conduct of meetings in a company's articles of association. However, the statutory policy reflected in section 168 must, in my judgment, far outweigh the power which Mr Butler has to paralyse company meetings by staying away. The court is not disturbing the bargain in the articles between the parties as to the balance of power between the shareholders by ordering a meeting with a quorum of one. Only Mr Smith has the benefit of a right to be part of the quorum because of the specific requirement in the articles that he must be counted towards the quorum requirement. Mr Butler enjoys no similar privilege. For the court not to make an order under section 306 on Mr Smith's application would have created a right ad hoc in favour of the minority shareholder that was not part of the bargain between the shareholders." (Smith v Butler [2012] EWCA Civ 314)
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