This was an application by Carpathian Resources Ltd, a publicly listed entity, (“the Company”) for determination of who are the lawful directors of the Company. Approximately 47% of the issued share capital in the Company is beneficially owned by Energo Holdings on behalf of OAG, a company registered in the Bahalmas who owns 39% of the issued share capital, and International Investments Limited, a company incorporated in the West Indies who owns 8% of the issued share capital in the Company. A further 17% is owned by HBC. Energo and HBC are both registered abroad within the Caribbean region: [8, 9].
In October 2010, HBC called an extraordinary general meeting of the Company pursuant to s 249F of the Corporations Act 2001 with a view to removing certain directors of the Company and replacing those directors with other certain persons: . On 15 December 2010, Nehoray Properties Karmeil Ltd and others obtained an ex parte injunction in the East Caribbean Supreme Court against Energo and OAG restraining OAG from voting against any of its shares in the Company: . On 16 December 2010, the EGM was held. The meeting was attended by a representative for OAG and International Investments and a representative of HBC and others. Each resolution put was voted against by OAG and International Investments and voted for by HBC. If OAG’s votes had not been counted HBC’s resolutions would have carried and the then board removed: .
The court was required to consider the chairperson’s decision to allow OAG to vote against its held share capital in face of the injunction. The chairperson took legal advice and had determined that the injunction did not bind the Company and so allowed OAG to vote: .
The court found that the validity of the chairperson’s decision is a question of law, but also, will be deemed invalid if made in bad faith or for an ulterior purpose: . The court noted that interlocutory injunctions operate in personam attaching to the conscience of the person restrained rather than to the property to which it extends and therefore determined the chairperson had not erred in law in allowing OAG to vote. The court also found that the chairperson had not acted in bad faith or for an ulterior purpose: .
The Company’s AGM was held on 17 December 2010. Mr Hendriks, a director of the Company opened the meeting as chairperson. The Court however noted that, by way of the Company’s constitution, Mr Hendriks ceased as a director of the Company at the conclusion of the EGM held the prior day.
The events of the AGM are described as somewhat chaotic. Objection was made to Mr Hendriks chairing the meeting and a poll was called for a chairperson to be elected. Whilst the applicants contended that a poll was validly called and voted upon, the court found that the party calling the poll had no entitlement to do so and, in any event, votes were made and then withdrawn to the effect that no one was actually validly appointed as chairperson.
The respondents contended that the Company constitution required natural person members, as opposed to corporate representatives to be in attendance. The court found that the constitution is to be regarded as a business document and construed so as to give reasonable business efficacy. Accordingly, the constitution does not require attendance of natural persons to validly vote on behalf of members: .
The AGM was also attended by Leo Robertson, as corporate representative of Leo Robertson Electrical Pty Limited which held a small number of shares in the Company. It was contended that Mr Leo was not validly appointed as corporate representative in that the appointment document was not properly executed. The court found that pursuant to ss 128(1) and 129(5) of the Corporations Act 2001, any person considering the validity of the corporate representative appointment form had a right to assume the document was executed by the company. As no objection was raised at the time of the meeting, it is now too late for such objection to be raised: [155, 156].
In the court’s view, the AGM failed to validly elect a chairperson for the meeting. The appointment of a chairperson is an indispensable part of any meeting and, in circumstances where the meeting fell into complete disarray, should be regarded as adjourned: [158, 162].
Relevant paragraphs of Ford
[7.380], [7.390], [7.406], [7.420], [7.425], [7.510], [7.515], [7.530], [7.581], [7.582], [10.380], [21.423]