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Union Music v Watson

[2003] 1 BCLC 453

Case summary last updated at 21/01/2020 20:10 by the Oxbridge Notes in-house law team.

Judgement for the case Union Music v Watson

Company with two shareholders. C, the majority shareholder, and D, the minority shareholder, fell out. A prior shareholder agreement between C and D provided that the shareholders should exercise their voting rights so that the company could not hold any meeting or pass any resolutions unless all the shareholders were present. D threatened not to attend any meetings, and C applied for court order a meeting limited to appointment of new director by C (in order to provide valid quorum). Held:
·        Section 306 does not allow court to override either:
i)         equal voting rights;
ii)       class rights
iii)      or entrenched rights
·       I.e. where these situations exist, will be presumed that it was intended for one shareholder to be able to block other from acting.
·        Relevant factors in exercise of power are:
i)         Ability of company to run its affairs
ii)       Right of majority shareholder to exercise his voting power
·        Is correct to exercise discretion to order a meeting here:
1)     Right in question here was simply a quorum requirement
-        And D did not benefit from any special class rights or entrenched rights
2)     Shareholdings were not equal
·       Thus meeting called for appointment of new director by C (even though he would be only person present).

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