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ACCA Applied Skills · Corporate and Business Law (Global) · Company meetings and resolutions

Delta Ltd's articles give Mr Ito, a director and 40% shareholder, three votes per share on any resolution to remove him. The other members hold 60% of the shares, with one vote each. Total shares are 1,000. Mr Ito holds 400 shares. All members vote. Applying the rule that such weighted voting rights are allowed, what is the outcome of an ordinary resolution to remove Mr Ito, if all other members vote in favour?

The resolution is defeated. Mr Ito's 400 shares carry three votes each, giving 1,200 votes against, while the other members cast only 600 votes in favour. Weighted voting rights on a removal resolution are valid under the Bushell v Faith principle, so the votes count as stated.

  1. APassed, with 600 votes for and 400 against
  2. BDefeated, with 600 votes for and 1,200 againstCorrect
  3. CPassed, because weighted votes are void in director removal
  4. DDefeated, because a director cannot be removed if he holds more than 25% of the shares

Explanation

Mr Ito's 400 shares carry 3 votes each, so 1,200 votes against. The other members have 600 votes for. 600 is less than 1,200, so the resolution fails. The weighted voting right is valid (Bushell v Faith), so the option claiming it is void is wrong. No 25% rule blocks removal.

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