Secondly, for the special resolution that in the interim Mr. Bolton is to act solely on the advice and direction of the other directors. Here the resolution is not abide by the weighted voting clause and the votes will be counted as normal. Mr. Bolton’s 25 votes can only amount to a quarter. So even though he opposes this by demanding a poll, the special resolution is effective, for it is passed by three quarters of the votes under both circumstances.
The one thing to notice is that the company has the characteristic of a quasi-partnership, In Ebrahimi v Westbourne Galleries, Lord Wilberforce explained ‘that such partnerships were formed on the basis of personal relationship between the participants, and that there is an understanding that each of the participants will be concerned in the management of the business.’ Where the relationship or mutual trust has broken down, as the case here that Mr. Bolton loses the approval of the other three members, it may be appropriate to make a winding-up order under ‘just and equitable’ rule according to s122 Insolvency Act (IA) 1986. But Mr. Bolton may not succeed because as many small companies are in fact quasi-partnerships, the court will regard to the actual substance and reality of the association rather than ordering winding-up. In this case, an alternative way would be for Mr. Bolton to sue under s459 Company Act 1985, In order to be eligible for this, Mr. Bolton would have to show that the affairs of the company are being or have been conducted in a manner unfairly prejudicial to the interests of some part of the members including himself as he is part of the membership. Here at the meeting, Mr. Chubb, the director of the chair refused to allow Mr. Bolton, to address the other member. Regarding this, Mr. Chubb has no authority to do these. S304 provides that any Director under threat of removal (under the special notice procedure) is permitted to receive a copy of the notice and may be heard on the resolution at the meeting. Moreover, such resolutions are not valid if at least 28 days’ special notice of its proposal is not given (s303). It is to enable the director to make representations within the notice. If the representation is received by the company too late for its distribution to the members, the director concerned may require that these representations be read out at the meeting. Thus, Mr. Bolton has the right to address the other members at the meeting.
Mr. Bolton has not been sent notice of the board meetings ever since the General Meeting where the two resolutions are voted and the other directors hold the meeting at a secret location. The problem here is that they treat Mr. Bolton unfairly prejudiced because, whether the resolution of removing Mr. Bolton is passed or not, he is still one of the directors of the company until the end of the year and he is entitled to attend the company meeting unless he does not want to attend. So notices of meetings should be sent to him as usual. This action is clearly unfairly prejudicial because it is initially the problem within their personal relationship that leads to the two resolutions being passed. They omit Mr. Bolton’s rights to attend the board meeting without letting him know. Therefore, Mr. Bolton can sue under the s459 Company Act 1985 to achieve redresses from his prejudicial situation and he could also petition the court for a winding-up order. The court is more likely to order winding-up under s459 CA 1985 rather than s122 Insolvency Act. Even if court is still reluctant to do so, he could possibly seek an order for the majority to buy out his shareholding at a fair price.
In conclusion, this case could be considered as a very typical case among small quasi-partnerships since the personal relationship has a large effect within the board. Although s303 CA 1985 allows to remove any director by ordinary resolution, the “weighted voting clause” and special art 9 enable the directors under such threat are always well protected and not easily removable. S304 also gives the threatened directors the right to reply to the resolution. So Mr. Bolton, as a minority shareholder, has some advantage to protect himself under such threat. S459 CA 1985 allows the directors who cannot successfully petition for winding-up order under s122 Insolvency Act to have another chance to protect themselves. They only need to provide the evidence that what the company or the majority shareholders have done to him has amounted to unfairly prejudice. Therefore, the minority is not always in a disadvantageous place, the relevant statutes could protect them from being treated unfairly and unlawfully.