Cane v Jones
An agreement signed by all the shareholders can alter the articles of association, without a formal special resolution, under the Duomatic principle.
Facts
A family company's articles gave the chairman a casting vote at board and general meetings. All the shareholders signed an agreement that the chairman should not use his casting vote, in order to keep a balance between the two branches of the family. Later, there was a dispute between the two branches, and the chairman claimed to be entitled to use his casting vote.
Legal principle
Michael Wheeler QC, sitting as a deputy judge, held that the agreement had effectively altered the articles, so the chairman had no casting vote. He said that the statutory requirement of a special resolution to alter the articles was only one way of altering them, and that the unanimous agreement of all the shareholders could have the same effect, applying Re Duomatic. The agreement signed by all the shareholders was equivalent to a special resolution.
Related cases on the company's constitution and decision making
- Allen v Gold Reefs of West Africa Ltd [1900] 1 Ch 656
- Ashbury Railway Carriage and Iron Co Ltd v Riche (1875) LR 7 HL 653
- Attorney General of Belize v Belize Telecom Ltd [2009] UKPC 10, [2009] 1 WLR 1988
- Brown v British Abrasive Wheel Co Ltd [1919] 1 Ch 290
- Bushell v Faith [1970] AC 1099
- Re Duomatic Ltd [1969] 2 Ch 365
- Eley v Positive Government Security Life Assurance Co Ltd (1876) 1 Ex D 88
- Greenhalgh v Arderne Cinemas Ltd [1951] Ch 286
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This summary is for study and revision and is not legal advice. Although our case summaries are checked for accuracy, we do not guarantee that they are free from errors or omissions. Always read the full judgment for the court's reasoning.
