Articles provided that certain special shares gave their holders a right to appoint two directors of the company.
Claimant purchased some of these voting shares, but fell into financial trouble and later sold them.
Issue was whether directors appointed by Claimant were required to vacate office one Claimant sold his shares.
Courts will imply terms into articles where this merely makes express what they would have reasonably been taken to mean against relevant background.
Court only has power to ascertain the meaning of the articles as a whole, and NOT individual terms.
Thus courts can imply terms in fact based upon meaning of articles as a whole.
Therefore “relevant background” includes:
Scheme of Articles themselves
To a very limited extent, background facts that third parties involved with the company would reasonably have known
On facts, anyone reading document as a whole would have reasonably understood that directors were required to vacate office.
Therefore terms could be implied to this effect.
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Company law | Corporate Governance Notes (18 pages) |