Construction of company articles: ordinary resolution could add directors, but not displace a special-majority safeguard for removing managing agents.

A company's articles were construed as a whole to determine whether a general meeting could, by ordinary resolution, increase the number of directors beyond a stated maximum and appoint additional directors; the broad power to increase or reduce directors was held effective, and the resolution was valid. By contrast, an ordinary resolution could not remove managing agents where the articles required an extraordinary resolution at a specially convened meeting with a qualified majority; that contractual and shareholder protection was upheld, and the removal resolution was invalid. The governing principle was that a general power may override a numerical limit only where the articles support that construction, but an express special-majority safeguard cannot be displaced by a lesser resolution.

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Issues: (i) Whether a company's general meeting could, by ordinary resolution under the articles, increase the number of directors beyond the stated maximum and appoint additional directors. (ii) Whether the managing agents could validly be removed by ordinary resolution notwithstanding the article requiring an extraordinary resolution.

Issue (i): Whether a company's general meeting could, by ordinary resolution under the articles, increase the number of directors beyond the stated maximum and appoint additional directors.

Analysis: The articles had to be read as a whole. The provision empowering the company in general meeting to increase or reduce the number of directors, subject to the statutory minimum, would be rendered ineffective if it were confined to the stated range in the article fixing the minimum and maximum. The references to alteration of qualification and rotation also showed that the general meeting power was intended to operate with some overriding effect. The articles were therefore construed by implying the necessary reconciliation between the provisions.

Conclusion: Resolution No. 1 was valid and the issue was decided in favour of the appellant.

Issue (ii): Whether the managing agents could validly be removed by ordinary resolution notwithstanding the article requiring an extraordinary resolution.

Analysis: The statutory provision on managing agents did not itself authorise removal by ordinary resolution; it only required the company's approval for appointment, removal, or variation of the managing agents' contract. The article specifically protected the managing agents by requiring an extraordinary resolution at a specially convened meeting with a qualified majority. Enforcing the resolution would defeat that contractual and shareholder protection and would not amount to prohibited specific performance of personal service.

Conclusion: Resolution No. 2 was invalid and the issue was decided in favour of the respondent.

Final Conclusion: The appeal succeeded on the validity of the resolution appointing additional directors, but failed on the attempted removal of the managing agents, with the consequential orders and costs adjusted accordingly.

Ratio Decidendi: Where company articles confer a general power in terms broad enough to override a fixed numerical limit, the articles must be construed as a whole to give effect to that power; but a removal mechanism expressly protected by a stipulated special majority cannot be displaced by a lesser resolution.

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