Mar 2016
BERMUDA
SUPREME COURT
COMPANIES ACT, 1981 SECTIONS 72, 76, AND 79 – FAILURE TO CONVENE ANNUAL GENERAL MEETING – RELIEF SOUGHT BY PERSON LACKING STANDING AS A ‘MEMBER’ – POWER OF COURT TO GRANT RELIEF TO BENEFICIAL OWNER OF SHARES – INHERENT JURISDICTION OF COURT
This case concerned an attempt by the Applicant Shareholders in the Respondent Company to bring about the Company’s Annual General Meeting (“AGM”) AGM in order to remove it from the control of a Chairman with dubious intentions. The Primary relief sought by the Applicants was an Order pursuant to Section 76 of the Companies Act, 1981 (the “Act”) compelling the convening of an AGM of the Respondent Company. It was also questioned whether another Shareholder, Greater Achieve Limited, which had attempted to have its beneficial ownership in the Company’s shares transferred into its own name from its Nominee but had been prevented from doing so under suspicious circumstances, could access relief under the same application notwithstanding their present lack of standing to petition.
The availability of the primary relief for the Applicants under Section 76 of the Act depended on the ‘legal impracticability’ of the Company convening the AGM. The Applicants argued that impracticability arose because not only was the Board obviously reluctant to convene the AGM, but it was now impossible for them to convene it without the intervention of the Court or the Registrar (Ng Pui Lung -v- CY Foundation Ltd and Luck Continent Ltd [2011] Bda LR 12). Under Section 71(1), AGMs are to be convened at least once per calendar year; under company Bye-laws, a time limit may fall before the end of the year. Kawaley CJ found that the date of delinquency in failing to hold an AGM arises at the first instance of breach of time limits, whether the limit is statutory or pursuant to the Bye-laws. It was common ground that as the Company had not held an AGM since June 2014; they were in breach of both limits. Therefore, it was legally impracticable for them to convene the AGM without the assistance of the Registrar or the Courts.