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ARTICLE · 15 APRIL 2013

Agreement Between Directors - Implied Terms And Conflict

Charles Russell Speechlys LLP
Charles Russell Speechlys LLP
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Charles Russell Speechlys LLP

Charles Russell Speechlys LLP

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The Court of Appeal refused to imply terms into an agreement between three directors of a company, the effect of which would have been to override a provision in the company’s articles of association, where it was not clear this was the intention of all the parties and did not affect the commercial workability of the agreement.

United KingdomCorporate/Commercial Law

Facts:

Dear, Griffith (together D) and Jackson had co-founded a company (P) which had a wholly-owned subsidiary (T). J and D entered into an agreement which provided, at clause 5, that P would use its voting rights to nominate and appoint J as a director of T and procure his re-appointment at every AGM thereafter until one of five termination events occurred. Clause 7 provided that the parties would take such action as reasonably required to give effect to the agreement.

T's articles of association gave the voting shareholders the sole power of appointment of directors but article 88 also gave the directors power to remove a fellow director by written notice given by all the other directors.

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