Shareholders were entitled to apply to court to circulate written resolution
04 December 2025Shareholders in a company were entitled to apply to the court for an order requiring the company to circulate a written resolution to its shareholders and permitting them to circulate the resolution themselves if the company were to refuse.
The decision clarifies an area of law that has been subject to uncertainty for some time.
What happened?
Webster and another v ESMS Global Ltd and others [2025] EWHC 3107 (Ch) concerned a company formed to acquire a medical toxicology information services business.
47.6% of the company’s shares were controlled by a Mr and Mrs Webster, another 47.6% were controlled by a Mr and Mrs Sood, and the remaining 4.8% were held by a trust. The company’s four directors were Mr and Mrs Webster and Mr and Mrs Sood.
The relationship between the Websters and the Soods broke down, and the board became deadlocked. The Websters proposed to resolve this by appointing a fifth, independent director.
To this end, the Websters sent the company a formal request under section 292 of the Companies Act 2006 to circulate a written resolution to its shareholders to appoint the fifth director. See box “What is a written resolution of a company’s members?” below for more information.
Mr and Mrs Sood refused to agree to circulate the resolution, arguing that it was vexatious.
With the board deadlocked, the resolution could not be circulated.
Mr and Mrs Webster applied to the court for an injunction to require the company to circulate the proposed written resolution, or, if the company were unable to do so because its board could not agree, to allow Mr and Mrs Webster (in their capacity as shareholders of the company) to circulate the resolution themselves.
Mr and Mrs Sood opposed the injunction. They argued that the Companies Act 2006 already provides a remedy where a company fails to circulate a written resolution, namely by imposing criminal liability on the directors. Based on previous case law, they said, this precluded the court from granting a different remedy.
The Soods also noted that other mechanisms in the Act, such as the power to require a general meeting under section 303, specifically give shareholders the ability to act unilaterally if the company refuses to comply. The fact that the Act does not create a specific power for shareholders to circulate a written resolution, they argued, indicates that shareholders are not supposed to be able to do so.
What is a written resolution of a company’s members?
Under UK law, certain matters relating to a company are usually decided by its members (also known as shareholders if the company issues shares). These matters include (among other things) appointing and removing directors of the company.
Broadly speaking, there are three ways in which members of a company can take a decision:
- by passing a resolution at a duly convened general meeting of the members. Members vote on a show of hands or, if a poll is demanded, according to how many voting rights they hold under the company’s articles of association. The resolution passes if it gains the required majority of votes cast by members who actually attend the meeting;
- by passing a written resolution of the members. Again, members vote according to how many voting rights they hold. The resolution passes if it gains the required majority of votes out of all members of the company. This means the number of votes needed to pass a written resolution is often higher than at a general meeting. Written resolutions are not available for certain decisions, such as removing a director or auditor. Moreover, public companies cannot use this procedure; and
- using the Duomatic principle. This allows the members to take a decision informally without passing a resolution at a general meeting or passing a written resolution. However, to do this, certain conditions must be met, including that the decision is approved by all members of the company who could have voted on it if a resolution had been proposed. Moreover, the Duomatic principle cannot be used for certain resolutions that have specific procedural requirements. This makes the Duomatic principle suitable only for select circumstances.
Written resolutions are usually the preferred way for members of private companies (particularly those without many shareholders) to pass resolutions, as they avoid the administrative hassle and inconvenience of convening a general meeting.
Usually, the company’s board proposes resolutions for the members to consider. However, members of a company also have rights to put resolutions on the agenda for consideration.
- Under section 303 of the Companies Act 2006, members who together hold at least 5% of a company’s paid-up voting shares (or, if the company does not issue shares, at least 5% of its voting rights) can require the board to convene a general meeting to consider a resolution. If the board does not do so within a prescribed timeframe, section 305 of the Act allows the members to convene the meeting themselves (without seeking a court order).
- Under section 292 of the Act, members who together hold at least 5% of the company’s voting rights can require the company to circulate a written resolution to the members generally. However, unlike for general meetings, if the company does not do so, the members have no power under the Act to circulate the written resolution themselves.
In both cases, the board does not need to take action if the proposed resolution would not have any legal effect, or if it is defamatory, frivolous or vexatious.
Since the concept of written resolutions was introduced into statute in the Companies Act 2006, it has been unclear what recourse members have if the board refuses to circulate a written resolution when required to under section 292.
The position commonly taken by commentators has been that, in these circumstances, the aggrieved members would need to requisition a general meeting under section 303, wait out the prescribed time (which could be several weeks), then call a general meeting themselves. Alternatively, if the members are unanimous on the matter, they could take the decision using the Duomatic principle.
For this reason, in our experience, it has historically been unusual for members who wish to table a resolution in the face of board opposition to seek to do so by way of a written resolution.
What did the court say?
The court granted the injunction.
The judge concluded that section 292 explicitly creates private rights for members of a company. It does not impose obligations on a company that merely happen to benefit the company’s members. Rather, it confers actionable rights against the company.
The court acknowledged that the Companies Act 2006 imposes criminal sanctions on directors for failing to circulate a written resolution. But criminal penalties protect public rights, not private rights, and are (in the judge’s words) “wholly inadequate for the purpose of vindicating private rights”.
As a result, the court was entitled to explore ways to ensure that the private rights created by section 292 can be respected. In the circumstances, an injunction of the kind the Websters were seeking was a suitable way of achieving that.
What does this mean for me?
This is a pragmatic decision which shows the courts’ readiness to protect shareholders’ interests.
The fact that the Companies Act 2006 does not give shareholders a right to circulate a written resolution directly should a board fail to do so seems, at first glance, odd. This is particularly the case given that shareholders do have a right to call a general meeting if the board refuses to do so.
One explanation that has previously been offered is that, unlike general meetings, written resolutions do not permit debate and discussion on an issue, which are arguably important elements of healthy governance where shareholders and the board have differing views.
Indeed, the court’s decision in this case does not hand shareholders a self-help remedy. Where a board refuses to circulate a written resolution, aggrieved shareholders remain unable to simply circulate it themselves.
Instead, they will need to apply to the court for an injunction, a process that is likely to be time-consuming and costly. However, this is, at least, a remedy for shareholders in the face of board opposition.
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