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Sole Directors – The Implications of Hashmi v Lorimer-Wing

September 2022

The High Court case of Hashmi v Lorimer-Wing earlier this year [2022] EWHC 191 (Ch), has called into question the validity of board decisions made by sole company directors with model articles and whether two or more directors are in fact required to constitute a quorum at a board meeting.

The general legal consensus is that following this case, for companies with unamended private company model articles, two or more directors are required to constitute a quorum to hold a board meeting and that the model articles without amendment are no longer suitable for private companies with a sole director.

Considering this case, a package of template documents has been put together to help companies with a sole director. These include:

• a guidance note that considers the case, the decision, its impact on the model articles and quorum requirements. It helps customers to understand the significance of the case as well as discussing the potential solutions that sole director companies may wish to consider putting in place going forward;

• revised articles of association suitable for sole director companies based on the model articles for private companies;

• a shareholders’ written special resolution to adopt these new articles of association;

• a letter to Companies House attaching the new articles and written special resolution;

• a letter to the company’s auditors and an accompanying explanatory note regarding the above changes;

• a shareholders’ written ordinary resolution ratifying the sole director’s previous decisions; and

• a letter to Companies House attaching the ordinary resolution.

These templates are designed for private limited companies, with a sole director, who wish to make the necessary changes to their constitution given the uncertainty that the High Court ruling in the Hashmi v Lorimer-Wing case has caused.

The contents of this Newsletter are for reference purposes only and do not constitute legal advice. Independent legal advice should be sought in relation to any specific legal matter.

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