Randhawa v Turpin (No 2) [2018] 2 WLR 1175

Facts

  • Mr. Randhawa and Mr. Turpin were the only directors and shareholders in a family company.
  • A dispute arose regarding the validity of a deed of release.
  • Mr. Randhawa contended that Mr. Turpin lacked authority to execute the deed without a formal shareholder resolution.
  • Mr. Turpin argued that informal discussions and mutual understanding between them as directors and shareholders sufficed to authorize the action.

Issues

  1. Whether informal shareholder approval can substitute for a formal shareholder resolution when the law requires such a resolution.
  2. Whether the deed of release executed by Mr. Turpin without a formal resolution was valid.
  3. The extent to which the Companies Act 2006 permits reliance on informal shareholder arrangements, particularly for major company actions.

Decision

  • The Court of Appeal held that informal shareholder approval does not override the requirement for a formal resolution where the law, specifically the Companies Act 2006, mandates one.
  • The deed of release required a formal shareholder resolution; Mr. Turpin's reliance on informal approval was insufficient.
  • The Court distinguished the case from Re Duomatic Ltd, indicating that informal consent is only valid where no formal procedure is legally required.

Legal Principles

  • The Companies Act 2006 prescribes formal procedures for shareholder resolutions, including written resolutions and meetings, to ensure proper record-keeping, shareholder participation, and minority shareholder protection.
  • Informal shareholder approval is only effective where the law does not mandate a formal process and must represent clear agreement from all shareholders; it is inappropriate for significant decisions or structural changes.
  • Re Duomatic Ltd confirms informal approval can authorize company actions only where all shareholders agree and no statutory requirement for a formal resolution exists.
  • Formal procedures are essential to safeguard shareholder rights and maintain transparency in company management.

Conclusion

Randhawa v Turpin (No 2) clarifies that informal shareholder agreements cannot replace formal resolutions required by company law; directors and shareholders must strictly comply with Companies Act 2006 procedures to ensure validity and protect shareholder rights.

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