Company took a loan from group called ‘3i’, whilst also issuing preferred ordinary shares to group. Later on, company issued debentures; however as company articles, issue of debentures required consent of ordinary preferred shareholders. When company went insolvent, was suggested that as 3i had not consented via written resolution to issue of debentures, issue was invalid. Held:
· Duomatic principle is not limited to situations in which the consent of all the shareholders in a company is given.
· Rather can apply equally where consent of a particular groupof shareholders is given.
· Here, 3i had given informal consent to issue of debentures
Ø Thus as it was sole holder of preferred ordinary shares, issue of debentures was valid