Poll continuation: Chairman must reschedule an interrupted poll; co optation to fill vacancies is ultra vires.

Co optation of individuals to fill shareholders' director vacancies was held ultra vires where the articles prescribe a different mode of filling vacancies; such acts cannot be validated by ordinary majority action and shareholders are entitled to elect directors to those vacancies. An individual shareholder may maintain suit to restrain or set aside such illegal acts when they derogate from the shareholders' right to elect management and internal remedies are inadequate. A demanded poll is a legal continuation of the original general meeting; the chairman must fix another time to take an interrupted poll rather than permit vacancies to be filled by ultra vires co optation.

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Issues: (i) Whether the purported co-optation of defendants to the board was valid or ultra vires and, consequently, whether the plaintiffs (shareholders) were entitled to a declaration that those co-options were illegal; (ii) Whether an individual shareholder may maintain the suit seeking such declaration and an order for a poll; (iii) Whether, having demanded a poll, the meeting continued in law until the poll was taken and whether the Chairman was obliged to fix another time for the poll when the first attempt failed.

Issue (i): Validity of the co-optation of defendants 3-7 as share-holders' Directors and entitlement to a declaration of illegality.

Analysis: The articles of association and company law principles governing modes of filling director vacancies and the distinction between casual vacancies, additions to the board, and vacancies by effluxion of time were applied. The amended articles did not preserve the former provision that outgoing directors continue until successors are elected. Article 68(g) applies only where the general meeting has terminated without filling a vacancy. Co-optation to fill the vacancies in the circumstances shown would be inconsistent with the articles and a perversion of Article 68(g). Acts which contravene the articles are ultra vires and cannot be validated by ordinary majority meeting action where the articles require a special procedure.

Conclusion: The co-optation of the defendants to the vacant share-holders' director posts was ultra vires and is declared illegal; the shareholders are entitled to elect directors to those vacancies.

Issue (ii): Competence of an individual shareholder to sue for declaration and reliefs sought.

Analysis: Authorities distinguishing injuries to the company as a whole from infringements of individual shareholder rights were applied. Where the alleged wrong is in derogation of the rights of shareholders to elect management and there is no adequate internal remedy, an individual shareholder may maintain suit to restrain or set aside illegal acts even though the matter affects the company generally. The articles bind shareholders and cannot be bypassed by majority action where such action would be ultra vires the articles; reliance on internal article remedies requiring special resolution was held not to preclude court relief where such remedies are inadequate or impracticable.

Conclusion: An individual shareholder may maintain the suit; the plaintiffs' form of action is permissible and relief can be granted.

Issue (iii): Legal effect of a demanded poll on the continuance of the general meeting and the Chairman's duty when the poll could not be held at the appointed time.

Analysis: Precedents establish that the taking of a poll is not a separate meeting but a continuation of the original general meeting for the purpose of ascertaining the meeting's sense; Article 49 expressly contemplates the poll being taken at such time and place as the Chairman directs and either at once or after an interval or adjournment. Where unforeseen circumstances prevent the poll being taken at the appointed time, the meeting does not terminate; the Chairman retains power and duty under Article 49 to appoint another time for taking the poll so as to afford a reasonable opportunity to voters and candidates. Article 68(g) therefore does not apply until the meeting has in law terminated without the vacancies being filled.

Conclusion: The general meeting continued in law for the purpose of taking the poll; the Chairman was obliged to appoint another time for the poll and could not treat the election as terminated so as to permit co-optation or deeming of re-election under Article 68(g).

Final Conclusion: The co-optations are illegal; the plaintiffs are entitled to a declaration to that effect and to an order directing the Chairman to proceed with a properly notified poll to elect the required number of share-holders' directors within the time fixed by the judgment.

Ratio Decidendi: Where a poll is duly demanded under company articles, the poll is a legal continuation of the original general meeting; the meeting endures for the purpose of taking the poll and the chairman has the power and duty under the articles to fix another date or otherwise ensure the poll is taken rather than permitting vacancies to be filled by ultra vires co-optation.

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