Facts
- The dispute involved a family-owned company with disagreements among family member shareholders regarding management practices.
- Shareholders held informal discussions on various business matters.
- One party claimed these informal discussions resulted in accepted company decisions.
- The court examined evidence such as emails to determine whether clear and unanimous agreement was actually reached between all shareholders.
Issues
- Whether unanimous shareholder consent for company decisions can be validly reached without holding a formal meeting.
- Whether informal communications, such as discussions or emails, provide sufficient evidence of unanimous consent.
- Whether such informal unanimous consent complies with legal or company requirements for shareholder decisions.
Decision
- The court held that unanimous consent had been achieved on certain matters without the need for a formal meeting.
- Shareholder agreements supported by clear approval from all parties were recognised as legally valid, regardless of the absence of formal procedural steps.
- The judgment clarified that the substance of agreement, not the formality of the meeting, determines validity.
Legal Principles
- Unanimous consent in company law arises from basic contract law principles, where mutual agreement of all parties creates a binding arrangement.
- Informal discussions may amount to unanimous consent, but the agreement must be clear and approved by all shareholders.
- The Companies Act 2006 provisions related to shareholder decisions were considered.
- Actual agreement is prioritised over formal procedural requirements.
- Proper records of communications evidencing unanimous consent are important, and compliance with the company’s internal rules, such as articles of association, remains necessary.
Conclusion
The judgment in Rolfe v Rolfe established that unanimous shareholder consent, even if reached through informal means and without a formal meeting, creates binding company decisions provided that clear, documented approval from all shareholders exists. This principle facilitates efficient company operations, particularly for smaller businesses, and illustrates the interplay between contract law, company law, and practical business needs.