Company law notes fully updated for recent exams in the UK. These notes cover all the major LLB company law cases and so are perfect for anyone doing an LLB in the UK or a great supplement for those doing LLBs abroad, whether that be in Ireland, Canada, Hong Kong or Malaysia (University of London). These notes were formed directly from a reading of the cases and main texts and are vigorous, concise and very well written.
Everything is conveniently split up by topic as you can see by the list o...
The following is a more accessible plain text extract of the PDF sample above, taken from our Company law Notes. Due to the challenges of extracting text from PDFs, it will have odd formatting:
Company Law Supervision III – Cases
POWER WITHIN A COMPANY
Division of Powers
Automatic Self-Cleaning Filter Syndicate [1906]
Quin & Axtens Ltd v Salmon [1909]
Breckland Group Holdings [1989]
Articles of company stated that management of company resided with directors. In addition, shareholders had shareholders’ agreement stating that litigation could only be brought on behalf of company with consent of directors. Majority shareholder (D) launched action on behalf of company, other shareholder (C) sought to have action restrained. Held:
Principle in Quin & Axtens applies
i.e. if decision is one for board to properly make, is not for shareholders to take it themselves
This conclusion is backed up by shareholders’ agreement
i.e. agreement indicates shareholders thought decision was properly one for the board to make
Thus as power to litigate was vested in board alone (and not the shareholders), was not one with which general meeting could intervene.
Thus litigation restrained.
General Meetings
Calling of Meeting
Kaye v London Tramway [1898]
Was provisional agreement for sale of an undertaking by one company to another. Purchaser agreed to pay substantial compensation to directors of company to compensate them for loss of office upon sale. Directors called meeting of members to approve purchase, but notice of meeting did not include reference to directors’ compensation payments. Held:
Notice was invalid
i.e. because it was inadequate
notice of meetings must be fair and adequate
Therefore approval of transaction by shareholders was also inadequate.
Conduct of Meeting
Union Music v Watson [2003]
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:
equal voting rights;
class rights
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:
Ability of company to run its affairs
Right of majority shareholder to exercise his voting power
Facts
Is correct to exercise discretion to order a meeting here:
Right in question here was simply a quorum requirement
And D did not benefit from any special class rights or entrenched rights
Shareholdings were not equal
Thus meeting called for appointment of new director by C (even though he would be only person present).
Notice
Colin Gwyer & Associates Ltd v London Wharf [2003]
Company had three directors. One director, who lived in Jersey, refused to recognise the valid appointment of another director. Meeting was planned in London for particular date, even though Jersey director had made it known he would not be able to attend on that day. Meeting took place on that day, but Jersey director was only sent formal notice for meeting in the morning of that day. In cross-examination, Jersey director admitted he would not have attended any meeting at which the director whose appointment he did not recognise was present. Held:
Where meeting is held of which some directors have no notice or insufficient notice, any resolutions passed at meeting are invalid.
Where a director is deliberately excluded from a meeting, business carried out at meeting is invalid.
i.e. where one director deliberately refuses entry to another director.
However fact that it is merely inconvenient for a director to attend meeting at particular time does not mean business carried out at meeting is invalid
Facts
Meeting was validly convened.
Jersey director cannot complain that he only got notice on morning of day of meeting
Had known about meeting for months
Was not entitled to notice under articles
Would not have attended anyway given the disputed director’s presence
Had the company deliberately excluded disputed director from meeting in order to make Jersey director attend, would have invalidated business of that meeting.
Chairman
Byng v London Life Association [1990]
Extraordinary general meeting was called to approve a merger. Deal was contentious, therefore meeting was expected to be well attended. Company arranged for meeting to be held at Barbican, with overflow room. On day of meeting, 800 people attended – so many that registration process failed and many people were stuck outside. First meeting had used audio-visual links which also failed to work. Chairman of meeting opened meeting, then shortly afterwards adjourned it to recommence at different venue later that afternoon due to all the problems. At second venue, many people who had attended first venue were unable to turn up. Merger was approved at second meeting; resolution was challenged. Held:
Common Law Power of Adjournment
Chairman has power at common law to adjourn meeting where it becomes impractical to continue it
Company’s articles stated that meeting could only be adjourned with consent of the meeting
However this does not mean that common law power was ousted
For common law power to be ousted, would have to be specifically excluded by articles
However common law power of adjournment must be used
Reasonably
Bona fide for purpose of facilitating the meeting
And NOT to disrupt voting on a resolution which chairman does not support
Technology
No need for all those present at meeting to be in same room
Thus audio-visual links for those not inside main venue are permitted
Facts
First meeting had been adjourned unreasonably
Company should held second meeting at a later date
Decision to adjourn it to different venue on same day meant number of members were...
Buy the full version of these notes or essay plans and more in our Company law Notes.
Company law notes fully updated for recent exams in the UK. These notes cover all the major LLB company law cases and so are perfect for anyone doing an LLB in the UK or a great supplement for those doing LLBs abroad, whether that be in Ireland, Canada, Hong Kong or Malaysia (University of London). These notes were formed directly from a reading of the cases and main texts and are vigorous, concise and very well written.
Everything is conveniently split up by topic as you can see by the list o...
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