Sole Director Companies Operating Under The Model Articles: Impacted By Ruling In Hashmi v Lorrimer-Wing [2022] EWHC 191 (Ch)

• Published date: 19 September 2022
• Subject Matter: Corporate/Commercial Law, Corporate and Company Law, Directors and Officers
• Law Firm: Preiskel & Co
• Author: Preiskel & Co

The judgment discussed below rendered two provisions of the Model Articles as inconsistent. Decisions made by a sole director of a company using the Model Articles may therefore be invalid or void. This means that sole directors of companies incorporated under the Model Articles should amend the Model Articles before incorporating them into their Articles of Association, appoint an additional director and if necessary get retrospective approval for past decisions.

The High Court Judgement

The recent High Court judgment in Hashmi v Lorrimer-Wing [2022] EWHC 191 (Ch) concluded that Article 7(2) of the Model Articles (for private companies limited by shares) should not override Article 11(2).

Model Article 7(2) states that "if a company only has one director, and no provision of the articles requires it to have more than one director... the director may take decisions". On the other hand, Model Article 11(2) requires the quorum for directors' meetings to "never be less than two, and unless otherwise fixed it is two".

Prior to this judgment, Model Article 7(2), which only permits a sole director to make decisions alone if no other Articles require more than one director, has been widely understood to prevail over...