UK: England and Wales: the power of the court to order a meeting

Judgment was given earlier this week in Schofield v Jones [2019] EWHC 803 (Ch). The case concerned an application under section 306 of the Companies Act 2006, which provides that where it is impracticable to call a meeting of a company, a director or shareholder can apply to the court for an order calling such a meeting. The directions that the court can make in such circumstances include, as stated by section 306(4), a direction that "one member of the company present at the meeting be deemed to constitute a quorum".

In the current case, a company had two shareholders: one a majority shareholder and also a director; the other a minority, and also a director. The quorum for shareholder meetings was two. Attempts by the majority shareholder to remove the other director by a resolution under section 168 of the 2006 Act were thwarted by that director's failure, qua shareholder, to attend shareholder meetings. The majority shareholder sought an order under section 306, including a direction that the quorum at the meeting should be one shareholder; this direction would enable the section 168 resolution to be passed. The order was granted and, in doing so, Judge Sally Barber stated (paras. [37] and [38]):

.... shareholders have a statutory right to remove a director by ordinary resolution under section 168 of the 2006 Act. Section 168 reflects a statutory policy that shareholders should be able to remove a director by ordinary resolution. This is not a case where there are any class rights at play. This is a case where the will of majority shareholder is being thwarted by the refusal of the minority to attend meetings of the Company so as to render the meetings inquorate. The statutory policy reflected in section 168 must, in my judgment, be afforded considerable weight in determining whether to grant relief under s306 to enable a meeting to be called for the purposes of removing a director.

The existence of concurrent s994 proceedings is not necessarily a bar to the grant of an order under s306 ... A fortiori, the mere fact that s994 proceedings have been threatened by the Respondent [the minority] does not preclude the granting of relief under s306. It is merely a factor to be weighed in the balance".