by Roderick Ramage, solicitor, www.law-office.co.uk
to be published in September by LexisNexis in Companies Acts: Model Articles and Table A, 3rd edition
This article is not advice to any person and may not be taken as a definitive statement of the law in general or in any particular case. The author does not accept any responsibility for anything that any person does or does not do as a result of reading it.
The model articles of association for companies in Table A in the schedule to the Companies (Tables A to F) Regulations 1985, SI 1985/805, before it was amended as a purported consequence of the Companies Act 2006, gave the chairman of a general meeting a casting vote in the following terms.
50 In the case of an equality of votes, whether on a show of hands or on a poll, the chairman shall be entitled to a casting vote in addition to any other vote he may have.
Provisions to the same effect have been included in all previous versions of Table A from that in the Companies Act 1862, and were included in the original published drafts of all three model articles to be introduced under the Companies Act 2006. The relevant provision in the original draft model articles for a private company limited by shares was as follows.
40 (1) A resolution put to the vote of a general meeting must be decided on a show of hands unless a poll is taken on it in accordance with the articles.
(2) If equal numbers of votes are cast for and against a resolution, whether on a show of hands or on a poll, the chairman of the meeting has a casting vote in addition to any other votes he is otherwise entitled to cast on that resolution.
The corresponding provisions for guarantee and public companies were in regs 27 and 33 of their respective draft model articles. The model articles in the schedules to The Companies (Model Articles) Regulations 2008, SI 2009/3229 omit sub-para (2) from what are now regs 43, 28 and 34 respectively, so that a chairman of a company, whose articles are or adopt the relevant provisions of the model articles without amendment, will not have a casting vote at a general meeting. The provisions for a chairman’s casting vote at meetings of directors have not been removed.
A corresponding alteration has been made to Table A by the Companies (Tables A to F) (Amendment) (No 2) Regulations 2007, SI 2007/2826, in which reg 3 states that reg 50 of Table A ceases to have effect from 1 October 2007. The explanatory note explains this provision as follows.
“Regulation 3 omits regulation 50 from Table A as it conflicts with sections 281 and 282 of the Companies Act 2006 (c 46).”
So far as is relevant, what ss281 and 282 say, in s282(a), is that
“An ordinary resolution of the members (or of a class of members) of a company means a resolution that is passed by a simple majority.”
Hascard v Somany, (1693) 1 Freem KB 504, held that the acts of the majority are binding in a corporation. There is a majority of votes if at least one vote more vote is cast on the one side than on the other. The adjective ‘simple’ adds nothing to the meaning of ‘majority’, but it has become a useful shorthand where, in the absence of further explanation, there is a risk of confusion with other majorities, eg two thirds or 75%. The expression ‘simple majority’ appears in no other section of the CA 2006. It appeared only once in the Companies Act 1985, where, in s 719 (Power of company to provide for employees on cessation or transfer of business) the power may be exercised by an ordinary resolution or, if the memorandum or articles so require, a resolution for which more than a simple majority is required, which shows that an ordinary resolution is a resolution for which a simple majority is required.
What is required for an ordinary resolution is a majority of votes. Where there is provision for a casting vote, the process of voting is not concluded until the chairman has declared the result, which he cannot do until either he has exercised his casting vote or stated that he declines to do so. If he exercises his casting vote, the result is that there is a majority. It is already established that articles may lawfully permit some shares to carry weighted votes (see Bushell v Faith  AC 1099,  1 All ER 53, HL), which exist specifically to enable the holder of them to have a majority of the votes cast at a meeting notwithstanding that he does not have a majority of all the shares giving a right to vote.
The definition of an ordinary resolution in s282(1) codifies but does not alter the existing law. It merely states what has been established law at least from 1693. It follows that the legislature’s explanation for the removal of reg 50 of Table A from 1 October 2007, when ss281 and 292 of the CA 2006 came into force, is spurious. There has been no conflict from 7 August 1862, when the Companies Act of that year came into force, (and probably earlier) until 30 September 2007 between the ability of a company to provide for a casting vote and the legal requirement that an ordinary resolution is one passed by a bare or simple majority; and that position has not been changed by s282(1).
In addition to the historic argument against BERR’s assertion that a chairman’s casting vote is inconsistent with the definition of a simple majority, is the inconsistency of that assertion with CA 2006 s284, which provides as follows.
284 The provision that on a written resolution or a poll one vote may be cast for each share or £10 of stock, or for each member (in other cases) and that on a show of hands one vote may be cast by each member present and each proxy, is subject to any provision of the articles.
This section enables the articles to vary any provision that a share (or £10 of stock) carries one vote or that each member on a show of hands has one vote. A provision that the chairman of a meeting has a casing vote is, if the chairman is a member, such a variation which the articles are expressly permitted to make.
There can however be a very good reason to debate the desirability of a casting vote. The question to be asked, whenever articles of association or similar documents are drafted, is whether there ought to be a casting vote; and for that reason the omission of a casting vote at general meetings from the model articles can be justified, even if the deletion of reg 50 of Table A is incorrect on the reason given.
There is no casting vote at common law: Bishop of Chichester v Harward (1787) 1 T Rep 650. It can be argued that, where there is an equality of votes, ie no majority in favour of a motion, it is desirable to maintain the status quo rather than to allow the decision to be made solely by one person. The contrary argument is that a casting vote has the advantage of a certain decision. In general the legislature appears to favour the latter view: eg, at local authority meetings, the person presiding at a meeting at which there is an equality of votes, has a statutory casting vote under the Local Government Act 1972, s99 and Sch 12. No one (yet) has argued that these provisions are unlawful because they apply only when there is an equality of votes on a matter which can be passed only by a simple majority.
In practice companies are likely to continue to wish to provide for chairmen of general meetings to have a casting vote, and, if so and if the relevant provision is in Table A or one of the model articles, they will need to alter their articles, in case of companies formed or adopting Table A on and after 1 October 2007, by reinstating reg 50, and, in the case of companies formed or adopting one of the model articles on and after the date on which they come into force (expected to be 1 October 2009), by adopting sub-para (b) of the original regulation quoted above or equivalent wording.
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