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directors appointment

Re: directors appointment

Postby atticus » Wed Oct 05, 2016 8:26 pm

David distinguishes between the company's articles of association and the private contract between the shareholders. He also makes the point that the company has not acted in breach of its obligations under the shareholders agreement.

The appointment is valid under the articles.

Yet it was made in breach of the shareholders agreement. That breach of contract can be remedied.
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Re: directors appointment

Postby jantra » Wed Oct 05, 2016 10:35 pm

@atticus

thanks for the explanation.

if the company has also signed the SHA (as i have stated earlier) does that not mean the company is also bound by its terms?

edit: would the shareholders be looking for the equitable remedy of specific performance in this case?
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Re: directors appointment

Postby atticus » Thu Oct 06, 2016 5:46 am

Analyse what the company has done. That is the point. Aren't your guys complaining about actions of other shareholders?
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Re: directors appointment

Postby jantra » Thu Oct 06, 2016 6:43 am

the 44% are not happy about the actions of the company appointing the director when the company is prohibited from doing so by the votes cast

edit: for the avoidance of doubt, we aren't looking to invalidate any third party transactions that have arisen as a result of this defective appointment.
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Re: directors appointment

Postby atticus » Thu Oct 06, 2016 7:50 am

The point David and I are making is that it is not the company that has made this appointment.
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Re: directors appointment

Postby dls » Thu Oct 06, 2016 11:21 am

would the shareholders be looking for the equitable remedy of specific performance in this case?


No. Specific performance is a remedy for breach of contract when the remedy is of a specific character and cannot be achieved by any other means or damages would not be a satisfactory remedy. It is for a failure to do something positive - usually the completion of a contract for a sale.

When you have a meeting, and the shareholders vote, does the company get a vote? No. How is the director appointed? By the vote.

When a contract is breached, what is the remedy? Damages.

How would a breach of contract - whether by the shareholders or by the company, invalidate the appointment?
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Re: directors appointment

Postby jantra » Thu Oct 06, 2016 11:46 am

I understand what you are both saying and i am taking on board your comments. I do struggle with the purpose of the SHA if its terms can be disregarded so easily. From a shareholders perspective, all shareholders and the company have agreed to be bound by the terms of the SHA, yet seemingly the shareholders can vote for an action that contradicts those terms by referencing the articles (which the shareholders have all agreed is subordinate to the SHA on internal matters).

what is the purpose of the SHA if it can be ignored so easily?
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Re: directors appointment

Postby atticus » Thu Oct 06, 2016 11:55 am

I used to have a framed cartoon with Snoopy saying "contracts can be broken, you know".

"Disregarding" the terms of the shareholders agreement may have consequences; your guys are presently taking advice. If a contract is broken, remedies are available.

The position is different if there is no contract. No contract, no breach, no remedy.
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Re: directors appointment

Postby jantra » Thu Oct 06, 2016 1:51 pm

@Atticus

I get all of what you have said. since the company signed the deed, does that mean the company is bound to act according to its terms (of the SHA) and should the company not act, then it will be in breach? If I am honest I am not sure from all that you have posted whether the breach is by the shareholders, the company or both.
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Re: directors appointment

Postby atticus » Thu Oct 06, 2016 2:12 pm

You are failing to get your head around the question of who breached what obligation. As David and I see it, the director in question was appointed by shareholders.

Your guys' lawyers will have fuller details, and are advising.
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