Author: Louisa Christofilou
The dispute arose in a company where relations between two major shareholder factions had completely broken down. Each side held 47.6% of the shares, leaving the remaining 4.8% in an employee benefit trust. Multiple legal summaries confirm this exact share structure. [erskinechambers.com]
Critically, while the trustee of that trust could not vote at a general meeting, it could vote on a written resolution, a distinction confirmed by the court, as the Guernsey decision had previously established.
Seeking a way to break the stalemate, one faction exercised its statutory right under sections 292–293 Companies Act 2006, asking the board to circulate a written resolution to appoint an additional director. Legal commentaries confirm this request was validly made under s292. [erskinechambers.com]
The board refused to circulate the written resolution, an act central to what followed.
Historically, many believed shareholders had no civil route to enforce s292 if a board refused. This view stemmed from long‑standing commentary suggesting the only remedy was criminal sanction, not injunctive relief. [charlesrus…echlys.com]
The High Court rejected that view.
The court held that the rights provided under s292–293 are private rights attached to share ownership, enforceable through the courts. It confirmed that shareholders may seek a mandatory injunction to compel a board to circulate a written resolution. Multiple authoritative legal sources confirm this interpretation. [erskinechambers.com]
The court granted the order and costs.
This judgment sets a major governance precedent: boards can no longer block written resolutions through inaction or procedural maneuvering.
A refusal to circulate a valid written resolution request is now legally challengeable, and courts appear ready to intervene.
For SMEs, family firms, and joint ventures, this decision limits the ability of directors to entrench deadlock or silence a shareholder group.
Shareholders with as little as 5% of voting rights now have a meaningful mechanism to force a resolution onto the agenda.
Board processes, Articles, and shareholder agreements must reflect the enforceability of statutory rights, many were drafted under the previous assumption that s292 was not practically enforceable.
A refusal to circulate a written resolution without legal grounds may now expose directors to court scrutiny and liability.
This case is a timely reminder that governance structures must be capable of withstanding shareholder tension or legal challenge.
Ask yourself:
If not, the time to act is now.
Bridgehouse provides:
Shareholder disputes rarely resolve themselves, and the Webster ruling has fundamentally changed the risk landscape for boards. If you want to ensure your governance framework can withstand legal challenge, speak to Bridgehouse today. Our experts will review your processes, identify vulnerabilities, and help you build a structure that protects both the board and your shareholders.
Contact Bridgehouse to schedule a governance health check, services@Bridgehousecs.co.uk
We would be pleased to answer any queries or have an informal chat to discuss your possible governance needs.