2 Order to restrain the doing or continuance of any
actcomplained of by the petitioner. Under this the
court could make an order directing the reduction of
directors’ remuneration found to be excessive and pre-
venting the payment of dividends to the minority.
3 Order to authorise civil proceedingsto be brought
in the name of the company by such persons and on
such terms as the court directs. This provision is of par-
ticular interest in that the court may authorise the bring-
ing of civil proceedings by the company, seemingly
without any of the restrictions of Fosson derivative
claims. It should be noted that the claim would not be
derivative. The company would be the claimant under
the court order and there would be no need for the
nominal defendant procedure.
4 Order to provide for the purchaseof a member’s
shares by the company or its other members and, if the
former is chosen, reduce the company’s share capital
as required. This provision was, of course, applied in
Re London School of Electronics(1985) where the order
was that the majority shareholders should buy the shares
of the member/director who had been excluded from
management. This has been the remedy most frequently
asked for and obtained in these claims.
Directors and secretary
The management of a company is usually entrusted to a
small group of people called directors. The main control
of the shareholders lies in their power to appoint or
remove directors. The company secretary is an import-
ant officer of the company in terms of its day-to-day
administration.
Every public company must have at least two dir-
ectors and every private company at least one (s 154).
Public companies must have a secretary and a sole dir-
ector cannot also be the secretary (s 271).Company secretaries (CA 2006,
Part 12)Section 270 states that private companies may, at their
discretion, have or not have a company secretary. The
company’s articles may contain the relevant provision
following choice. Where no provision appears in the
articles then the articles will be treated as providing that
the company is permitted to have a secretary but not
required to. The articles will not be deemed to provide
that the company is not to have a secretary. Where art-
icles are altered to state that the company is required to
have a secretary, or is permitted to have one, or is not to
have one, this change can be made once only.
If there is no secretary in post because of a temporary
vacancy or because the company is not to have a secret-
ary by the articles, then under s 274 the function will
fall either to a director or to another person authorised
generally or specifically to carry out the function(s). This
is an interesting provision, because if a person is author-
ised generally to carry out the function a company whose
articles provide that it is not to have a secretary would
appear to have one in fact in all but name. If there is a
failure to authorise a director or other person the func-
tion goes to the board of directors.
As regards the register of secretaries, s 275 requires
a public company to keep such a register. As regards
private companies, s 275 also provides that such a company
whose articles require it to have a secretary, or whose
articles permit it to have a secretary, and in this latter
case it has one, may keep a register of secretaries. The
register, if kept, is to be available at the registered office
and available for inspection by members free and others
on payment of such fee as may be prescribed.Part 2Business organisations
178
Re H R Harmer (1959)Mr H senior, formed a company through which to deal in
stamps. He gave his two sons shares in the company
but kept voting control himself. Mr H senior was ‘gov-
erning director’ and his sons were also directors. Mr H
senior ignored resolutions of the board; he set up a
branch abroad which the board had resolved should not
be set up; he dismissed trusted employees, drew un-
authorised expenses; and engaged a private detective to
watch the staff, presumably because he thought they might
steal valuable stamps (imagine the effect on industrial
relations!). Eventually the sons petitioned the court.
The court found, in effect, unfair prejudice. In giving
relief the court ordered Mr H senior to act in accordance
with the decisions of the board and ordered that he
should not interfere in the company’s affairs otherwise
than as the board decided. The company’s articles were
altered by the court order to this effect.
Comment. Once the articles have been altered by the
court order, a special resolution is not enough to change
the articles affected by the court order. The court itself
must give permission for the change.