Implied Terms and Nominated Directors: automatic vacancy not triggered by partial transfer of appointing group's shares.

A nominated director appointed under an article conditioned on the appointing group's shareholding does not, by necessary implication, vacate office when the group ceases to hold part of those shares; the articles and statute supply express grounds for vacation and may add specific grounds but do not permit importing a new disqualification by implication. The court applied the implied term test (necessity for business efficacy or being obvious) and held that the phrase qualifying nomination and the word "otherwise" cannot reasonably be read to create an automatic vacancy on partial transfer absent explicit provision.

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Issues: Whether a director appointed under article 88 as a nominated director vacates office by necessary implication when the appointing group ceases to hold the shares specified in article 88 (on transfer of part of the shares to persons outside the specified group).

Analysis: The Court examined articles 47, 88, 89 and 94 of the articles of association and Section 86(1) of the Companies Act. Article 88 grants the power to appoint and remove a nominated director so long as the named person or his wife or children hold the specified 250 shares; article 89 provides that a nominated director holds office until requested in writing to retire by the appointing party and that nominated directors are not subject to retirement by rotation. Section 86(1) prescribes statutory grounds for vacation of office and articles may add further specific grounds. The Court applied the established test for implying terms (whether implication is necessary to give business efficacy or is such that it "goes without saying"), as stated in Luxor (Eastbourne) Ltd. v. Cooper, and held that there is no express or necessary implied provision in the articles that a nominated director's office automatically becomes vacant when the appointing group's shareholding ceases; "otherwise" in article 89 cannot reasonably be read to import a new ground of disqualification absent explicit specification in the articles or statute.

Conclusion: The nominated director does not vacate office by implication on the transfer of part of the specified shares to persons outside the group; the first defendant continues to be a nominated director and the plaintiff's claim for a declaration of vacancy is rejected.

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