ACCA LW · Chapter 10 · Question 2 of 13
The articles of a small company provide that on a resolution to remove a director, that director's shares carry three votes each. Following Bushell v Faith, what is the effect of such a provision?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) It is valid, and may in practice allow the director to defeat a resolution for removal
Explanation
In Bushell v Faith the House of Lords upheld a weighted voting clause, holding that Parliament had only required an ordinary resolution and had not restricted how votes could be attached to shares. As a result, a director with sufficient weighted votes can defeat a resolution to remove them. Such clauses are common in small private companies; listed companies are subject to additional listing and governance expectations.
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