Quin & Axtens Ltd v Salmon
Where the articles give a director a power of veto over certain decisions, the shareholders cannot override it by an ordinary resolution.
Facts
The articles of Quin & Axtens gave the management of the business to the directors, but provided that no resolution of the directors to buy or lease certain properties would be valid if either of the two managing directors, Mr Salmon and Mr Axtens, dissented. Mr Salmon dissented from a resolution to acquire certain premises. The shareholders then passed an ordinary resolution in general meeting to acquire the premises. Mr Salmon sought an injunction.
Legal principle
The House of Lords held that the shareholders' resolution was invalid, and granted the injunction. The articles were a contract by which the members had agreed that the directors should manage the company, subject to Mr Salmon's veto. The members could not override the articles by an ordinary resolution, but could only change them by a special resolution altering the articles. The decision reflects the principle that the division of powers between the board and the general meeting depends on the articles.
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
- Cane v Jones [1980] 1 WLR 1451
- Re Duomatic Ltd [1969] 2 Ch 365
- Eley v Positive Government Security Life Assurance Co Ltd (1876) 1 Ex D 88
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