O'Sullivan v Conroy Gold and Natural Resources Plc
| Jurisdiction | Ireland |
| Judge | Mr Justice Max Barrett |
| Judgment Date | 26 September 2017 |
| Neutral Citation | [2017] IEHC 543 |
| Docket Number | 2017 No. 281 COS |
| Court | High Court |
| Date | 26 September 2017 |
[2017] IEHC 543
THE HIGH COURT
Barrett J.
2017 No. 281 COS
AND
Company – S. 144 of the Companies Act, 2014 – Appointment of directors – Notification requirements – Consent Notice – Compliance with prescribed statutory time-limit
Facts: The plaintiff sought a declaration to the effect that the conduct of the first named respondent/company in failing to give effect to the vote of the members in relation to the disputed resolutions for the appointment of the nominated directors was oppressive to the plaintiff. The plaintiff contended that the first named respondent failed to acknowledge the voting given by the members on the disputed resolution regarding the approval of the appointment of three new non-recommended directors and that there was a practical and substantive compliance of requirements of s. 144 of the Companies Act, 2014. The first named respondent contended that the plaintiff failed to comply with the notification requirements under art. 85 of the article of association of the company which required that signed consent should have been received from the nominated directors regarding their willingness for the appointment as directors and failed to give the documents and information within the time prescribed to the first named respondent.
Mr. Justice Max Barrett refused the reliefs sought by the plaintiff. The Court held that the plaintiff failed to comply with the eligibility requirements of both s.144 of the Act of 2014 and art.85 of the article of association of the company. The Court further rejected the plaintiff's contention that there was a practical and substantive compliance with the notification requirements and held that the notification requirements were simple and clearly worded to the effect that notice executed by the members qualified to vote must be given to the company at the relevant general meeting for proposing the non-recommended person for appointment as director. The Court held that no such notice had been received by the company. The Court held that the emails exchanged between the plaintiff and the first named respondent did not satisfy the notice requirements. The Court noted that considering the stature of plaintiff who was always available with the legal advisor, the plaintiff would presumably be familiar with the rules applicable and there should be no obligation on the first named respondent to remind the plaintiff of the notification requirements.
(Numbers in square brackets are paragraph numbers)
I. Background [1]
(i) The Dispute Arising. [1]
(ii) Article 85. [2].
(iii) Legal Standing of Company Articles. [7].
(iv) Section 144. [13]
(v) A “Trick of the Loop”? [16]
II. Summary Chronology of Events [20]
III. The Days Previous to the EGM [61]
IV. The Day of the EGM [63]
V. The “Newstalk” Interview [65]
VI. Reliefs Now Sought [67]
VII. Some Conclusions [68]
(i) No giving of notices, nor particulars or information required to be contained in same. [69]
(ii) E-mails of May, 2017 and meeting of June, 2017 do not satisfy notice requirements. [71]
(iii) Allenby and IBI. [73]
(iv) Questionnaires not delivered to Conroy Gold. [74]
(v) Non-consent to Disclosure. [78]
(vi) Deficiency in Questionnaires. [80]
VIII. Failure to Comply with Article 85/Section 144 [82]
IX. Waiver and Estoppel [87]
(i) Waiver. [87]
(ii) Estoppel. [90]
a. Application of Doran. [90]
b. Changing One's Position to One's Detriment. [94]
X. Director Duties [95]
(i) General. [95]
(ii) A Director Occupies a Fiduciary Position. [96]
(iii) Section 228 of the Act of 2014. [97]
(iv) Duty to Ensure Shareholders do what is Contractually Agreed? [100]
(v) Improper Motive? [102]
a. The Evidence. [102]
b. Gwyer and Eclairs. [104]
(vi) Oppression. [109]
XI. Operation of Conroy Gold [110]
XII. Conclusion [111]
(i) The Dispute Arising.
Mr O'Sullivan is a circa. 28 per cent shareholder in Conroy Gold, a public limited company incorporated in Ireland, chaired by Prof. Richard Conroy and quoted on the London Stock Exchange's AIM market (formerly the Alternative Investment Market) and the Irish Stock Exchange's Enterprise Securities Market (“ESM”). On 30th May, 2017, Mr O'Sullivan served notice, pursuant to s.146 of the Companies Act 2014, of his intention to propose nine ordinary resolutions at a general meeting of the company. Those resolutions related to the removal of six serving company directors and the appointment of three company directors, Messrs O'Sullivan, Heddle and Johnson. On 8th June, 2017, Mr O'Sullivan requisitioned the directors, pursuant to s.178 of the Companies Act 2014, to convene an extraordinary general meeting (“EGM”) of Conroy Gold. That EGM convened at the Davenport Hotel in Dublin on 4th August, 2017. At the EGM, the chairman submitted the resolutions in their entirety to a vote of the assembled company members. The unanimous recommendation of the board of directors of the company was that each of the resolutions should be rejected by the members. After a show of hands, a formal poll was requested. It is now known that all of the resolutions were approved by a majority vote. There is no dispute arising concerning the validity of the six resolutions which effected the despatch of six of the then sitting directors. There is a dispute concerning the validity of the three resolutions whereby Mr O'Sullivan sought to have himself and Messrs Heddle and Johnson appointed to the Board. That dispute centres on Art.85 of the articles of association of Conroy Gold and certain related provision in s.144 of the Act of 2014.
(ii) Article 85.
Article 85 sits within a part of the articles of association of Conroy Gold that is entitled ‘PART XIII – APPOINTMENT, RETIREMENT AND DISQUALIFICATION OF DIRECTORS’ and which provides as follows:
‘85. Eligibility for Appointment
No person other than a Director retiring by rotation or retiring pursuant to Article 82(b) hereof shall be appointed a Director at any general meeting unless [A] he is recommended by the Directors or [B] not less than seven nor more than forty two days before the date appointed for the meeting notice executed by a member qualified to vote at the meeting has been given to the Company of the intention to propose that person for appointment stating the particulars which would, if he were so appointed, be required to be included in the Company's register of Directors together with a notice executed by that person of his willingness to be appointed.’
Provisions akin to Art.85 are not uncommon in the articles of association of a public company in Ireland. Nowadays, the primary purpose of such an article is to enable a company to comply with the requirements of the Act of 2014 relevant to the appointment of directors, including ss. 144, 149, 151 and 223, and to ensure, for example, that none of the restrictions on who may be appointed a director are breached by would-be directors, e.g., the limitation on the number of directorships permissible under s.142 of the Act of 2014. Notable provisions in this context include:
( 1) s.144(1) which provides that ‘Any purported appointment of a director without that director's consent shall be void’;
( 2) s.144(4) which provides, inter alia, as follows:
‘[N]ot less than 3 nor more than 21 days before the day appointed for the meeting there shall have been left at the company's registered office – (a) notice in writing signed by a member of the company duly qualified to attend and vote at the meeting for which such notice is given, of his or her intention to propose the person concerned for such election; and (b) notice in writing signed by the person concerned of his or her willingness to be so elected’;
( 3) s.149 which requires, at ss.(1), that ‘A company shall keep a register…of its directors…’, the contents of that register being amplified upon in later subsections;
( 4) s.149(8) which provides, inter alia, as follows
‘The company shall, within the period of 14 days after the date of the happening of–(a) any change among its directors…; or (b) any change in any of the particulars contained in the register, send to the Registrar a notification in the prescribed form of the change and of the date on which it occurred.’
(Per s.223(3) of the Act of 2014: ‘The consent in respect of a director to accompany…(b) a statement under section 149(8), shall include a statement by the director (immediately above his or her signature on the consent) in the following terms: “I acknowledge that, as a director, I have legal duties and obligations imposed by the Companies Act, other statutes and at common law”’);
and
( 5) s.151 which prescribes various particulars to be shown on all business letters of a company, including, per s.151(1), ‘in legible characters in relation to every director of the company the following particulars: (a) his or her present forename, or the initials thereof, and present surname; (b) any former forename and surnames of him or her; and (c) his or her nationality, if not Irish.’
Returning to the text of Art.85, as quoted above, item [A] is not relevant to the within application. Turning to item [B], its requirements are simply stated and clear: if it is proposed to appoint a director who is not recommended by the Board (a “Non-Recommended Person”; and each of Messrs O'Sullivan, Heddle and Johnson was a Non-Recommended Person), the following applies:
(1) notice executed by a member qualified to vote at the relevant general meeting must be given to the company;
(2) that notice must state the intention to propose the...
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Madden v Irish Countrywomen's Association
...24 above. In this regard, it seems to me that the principle set out by Barrett J. in O'Sullivan v. Conroy Gold and Natural Resources plc [2017] IEHC 543 (albeit in the context of the articles and association of a company) is relevant, namely that a resolution which contravenes the articles ......