Shareholder dispute resolved in favour of majority; procedural compliance upheld
Judge: Hon. Justice M. Kileo
Analysis of a High Court decision on a corporate shareholder dispute where the court upheld the validity of an EGM and the removal of a director for breach of fiduciary duty. The judgment reinforces the importance of following company procedures and proper notice.
Facts
The applicant (a minority shareholder and former director) sought to nullify resolutions passed at an Extraordinary General Meeting that had removed him from the board and approved a capital restructuring. The applicant alleged inadequate notice, lack of quorum, and bias. The respondent company produced minutes, attendance records, and proof of dispatch of notice by registered post and email in accordance with the articles of association.
Legal principle
The Companies Act and the company's articles of association govern the convening and conduct of general meetings. Resolutions passed at a meeting convened in compliance with the articles are valid unless the applicant proves material irregularity affecting the outcome. The burden of proving invalidity lies on the challenger.
Key issues
2. Whether quorum was present and the resolutions were passed by the required majority.
3. Whether the removal of the director was for a legitimate purpose and in the best interests of the company.
Ratio decidendi
The court held that notice had been given in accordance with the articles and that the applicant had failed to adduce evidence of material irregularity. The removal of a director for breach of duty, when properly approved by the general meeting, is a matter for the company's governance. The application was dismissed.
Commentary
This judgment is a useful reference for corporate clients on the importance of documenting EGM procedures and maintaining clear records of notice and resolutions. It also confirms the court's reluctance to interfere with internal corporate decisions where due process has been followed.