Bushell v Faith

A provision in the articles giving a director weighted voting rights on a resolution to remove him is valid, although it can defeat the statutory power to remove directors by ordinary resolution.

Citation
[1970] AC 1099
Court
House of Lords
Year
1970
Subject
Company Law
Topic
The company's constitution and decision making

Facts

A company had three shareholders, a brother and two sisters, each holding 100 shares, all of whom were directors. The articles provided that, on a resolution to remove a director, that director's shares would carry three votes each. The two sisters wanted to remove their brother as a director, and passed an ordinary resolution to remove him. The brother argued that, under the weighted voting provision, he had 300 votes against their 200, so the resolution was defeated.

Legal principle

The House of Lords held, by a majority, that the weighted voting provision was valid, so the resolution was defeated. Lord Upjohn said that Parliament had not sought to fetter the right of the company to issue a share with such rights or restrictions as it may think fit, and that the statutory provision allowing removal of a director by ordinary resolution did not prevent the articles from attaching weighted votes to shares on a particular resolution. Lord Morris dissented, saying that the provision made a mockery of the statute.

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