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Mon 12 Aug 2019

Important Case on the Operation of Section 303(5) of the Companies Act 2006

Important Case on the Operation of Section 303(5) of the Companies Act 2006

The decision in the case of Kaye v Oxford House (Wimbledon) Management Company Ltd [2019] EWHC 2181 (Ch) is an important and interesting one exploring the operation of general meetings and, in particular, the role of the chairman in conducting the business and in closing the meeting.

Judgment was handed down in this matter on Thursday 8th August 2019 by Deputy High Court Judge Lance Ashworth QC and it appears it may be one of the first case authorities to consider the operation of Section 303(5) of the Companies Act 2006 which provides that a resolution may be moved at a meeting unless:

(a) it would, if passed be ineffective (whether by reason of inconsistency with any enactment or the company's constitution or otherwise);

(b) it is defamatory of any person; or

(c) it is frivolous or vexatious.

An extract from the Judgment reads as follows:

It is the duty and function of the chairman to preserve order and to take care that the proceedings are conducted in a proper manner and that the sense of the meeting is properly ascertained with regard to any question which is properly before the meeting. However, he does not have power to stop the meeting at his own will and pleasure ... the chairman is not running the general meeting for his own benefit, but for the benefit of the company as a whole. The chairman must therefore act at all times in good faith and for proper purposes, remembering at all times that the authority to preside over the meeting does not confer dictatorial power" (para. [106]).

For a link to the full case, please click here: https://www.bailii.org/ew/cases/EWHC/Ch/2019/2181.html

To discuss any concerns you may have about how your company’s general meetings are held please contact Andrew Morgan, Partner and Head of Corporate and Commercial a call on 020 7644 6303 or email amorgan@jpclaw.co.uk or contact him on LinkedIn.

If you would like to discuss residents management companies generally please give either Yashmin Mistry, Partner & Property Practice Group Leader a call on 0207 644 7294 or email: ymistry@jpclaw.co.uk or contact her on LinkedIn

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