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).