Ciban Management Corporation v Citco (BVI) Ltd [2020] UKPC 31

Facts

  • The case concerned Ciban Management Corporation and Citco (BVI) Ltd, involving asset transfers following the liquidation of a company.
  • Dispute arose as to whether payments made without formal shareholder votes were valid.
  • The disagreement centered on applying the Duomatic principle to validate informal approvals of company actions.
  • The Privy Council considered whether informal shareholder agreement could render the payments lawful in the British Virgin Islands context.
  • The case impacts companies operating in offshore jurisdictions, especially regarding actions taken after liquidation.

Issues

  1. Whether informal shareholder agreement, absent formal procedural compliance, was sufficient to validate company actions under the Duomatic principle.
  2. Whether all shareholders had to unanimously consent for the Duomatic principle to apply.
  3. Whether shareholders needed to be aware of all material facts and consequences when giving consent.
  4. Whether actions validated under the Duomatic principle must still be within the company’s legal powers.

Decision

  • The Privy Council confirmed that the Duomatic principle applies in the British Virgin Islands.
  • The Court held that informal but unanimous shareholder approval could make company actions lawful, even in the absence of formal procedures.
  • It was emphasized that unanimous consent from all shareholders is necessary; majority consent is insufficient.
  • The Privy Council stressed the need for clear evidence showing that each shareholder was aware of the essential facts before consenting.
  • The Court clarified that the Duomatic principle does not validate actions that a company has no legal authority to perform.
  • The Duomatic principle permits informal, unanimous shareholder agreement to validate company decisions that would otherwise require formal approval.
  • All shareholders must give genuine consent, with full knowledge of the relevant facts and implications.
  • The principle cannot be used to legitimize company actions outside the scope of legal authority or to override statutory or common law requirements.
  • Companies should maintain clear records of shareholder agreement and awareness to avoid future disputes and demonstrate compliance.
  • Unanimous consent protects minority shareholders from disadvantageous informal decisions.

Conclusion

The Privy Council's decision in Ciban Management Corporation v Citco (BVI) Ltd affirms that the Duomatic principle enables informal unanimous shareholder approval to validate company actions, but only if all shareholders are fully informed and the action is lawful. Proper records and strict adherence to these requirements are essential, especially in contexts like liquidation and in offshore jurisdictions.

The answers, solutions, explanations, and written content provided on this page represent PastPaperHero's interpretation of academic material and potential responses to given questions. These are not guaranteed to be the only correct or definitive answers or explanations. Alternative valid responses, interpretations, or approaches may exist. If you believe any content is incorrect, outdated, or could be improved, please get in touch with us and we will review and make necessary amendments if we deem it appropriate. As per our terms and conditions, PastPaperHero shall not be held liable or responsible for any consequences arising. This includes, but is not limited to, incorrect answers in assignments, exams, or any form of testing administered by educational institutions or examination boards, as well as any misunderstandings or misapplications of concepts explained in our written content. Users are responsible for verifying that the methods, procedures, and explanations presented align with those taught in their respective educational settings and with current academic standards. While we strive to provide high-quality, accurate, and up-to-date content, PastPaperHero does not guarantee the completeness or accuracy of our written explanations, nor any specific outcomes in academic understanding or testing, whether formal or informal.
No resources available.

Job & Test Prep on a Budget

Compare PastPaperHero's subscription offering to the wider market

PastPaperHero
Monthly Plan
$10
Assessment Day
One-time Fee
$20-39
Job Test Prep
One-time Fee
$90-350

Note the above prices are approximate and based on prices listed on the respective websites as of May 2025. Prices may vary based on location, currency exchange rates, and other factors.

Get unlimited access to thousands of practice questions, flashcards, and detailed explanations. Save over 90% compared to one-time courses while maintaining the flexibility to learn at your own pace.

All-in-one Learning Platform

Everything you need to master your assessments and job tests in one place

  • Comprehensive Content

    Access thousands of fully explained questions and cases across multiple subjects

  • Visual Learning

    Understand complex concepts with intuitive diagrams and flowcharts

  • Focused Practice

    Prepare for assessments with targeted practice materials and expert guidance

  • Personalized Learning

    Track your progress and focus on areas where you need improvement

  • Affordable Access

    Get quality educational resources at a fraction of traditional costs

Tell Us What You Think

Help us improve our resources by sharing your experience

Pleased to share that I have successfully passed the SQE1 exam on 1st attempt. With SQE2 exempted, I’m now one step closer to getting enrolled as a Solicitor of England and Wales! Would like to thank my seniors, colleagues, mentors and friends for all the support during this grueling journey. This is one of the most difficult bar exams in the world to undertake, especially alongside a full time job! So happy to help out any aspirant who may be reading this message! I had prepared from the University of Law SQE Manuals and the AI powered MCQ bank from PastPaperHero.

Saptarshi Chatterjee

Saptarshi Chatterjee

Senior Associate at Trilegal