The recent case of Webster v ESMS Global Ltd [2025] has brought about the first reported decision to consider whether the civil courts have jurisdiction to confer private rights on shareholders which ultimately compel a private company to circulate a written resolution.
Overview: written resolutions under the Companies Act 2006
Section 292 of the Companies Act 2006 allows members of a private company to require the company to circulate a written resolution in place of passing a resolution at a general meeting of the members. This affords a private company greater flexibility in how its members may pass a resolution.
Specifically, the requirements of s.292 include:
- The members making a request for circulation of a written resolution must hold at least 5% of the total voting rights (unless the company sets a lower standard in their articles); and
- The resolution must be capable of being effective if passed and it cannot be defamatory, frivolous or vexatious i.e., it must be a genuine resolution; and
- In their request, the members must identify the relevant resolution and any accompanying statements. Such request must be authenticated by those members making the request.
The requesting members are obligated to pay the company’s expenses for circulating the written resolution unless the company resolves otherwise.
Provided all the above requirements are satisfied, the company must then circulate the resolution to every eligible member under s.293 of the Companies Act 2006.
Background of Webster v ESMS Global Ltd [2025]
The crux of Webster v ESMS Global Ltd [2025] was that relationships between the directors of the company had broken down which resulted in the board being deadlocked over a particular decision. It was therefore decided that an independent director should be appointed to break deadlock. Certain members of the board requested that the resolution be circulated as a written resolution, and they paid £50.00 on account of the company’s costs. The opposing directors refused the request, asserting that the company’s costs would far exceed £50.00.
The requesting members therefore commenced proceedings in the civil courts seeking:
- A declaration that the company was required to circulate the written resolutions requested;
- A mandatory injunction to compel the company to circulate the resolutions;
- An ancillary order authorising the claimant directors to circulate the resolutions if the company failed to do so.
The main controversy in this case was that the Companies Act 2006 creates a criminal offence for officers of a company that fail to comply with a request for a written resolution to be circulated where that request satisfies the requirements of s.292 above. The company therefore objected to the claim on the basis that the civil court did not have jurisdiction over such matters as they argued it was reserved for the criminal court.
Outcome at the High Court
The High Court determined that it did have jurisdiction to grant the relief sought and, in fact, granted all 3 limbs of the claimant’s claim.
It was decided that a true interpretation of s.292 and s.293 of the Companies Act 2006 was intended to give shareholders a private remedy to enforce compliance with these provisions of the act and the criminal sanction for failure to comply was not exclusive.
Key to the court’s decision, was the fact that s.292 and s.293 expressly conferred rights upon a protected and limited class of person (in this case the members proposing the resolution).
The High Court also distinguished the criminal sanction from the civil remedy in that the criminal sanction would be against the directors rather than the company whereas the civil remedy would compel the company to comply with the request for a written resolution.
Private companies are therefore encouraged to familiarise themselves with the provisions of s.292 and s.293 of the Companies Act 2006 and treat requests for a written resolution with due diligence.
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