A Big Change for Companies with Sole Directors

Please note that this News item is not maintained, and reflects the law as at the date of publication or update.

Most companies in England and Wales are not multinational corporations but are smaller and often family-owned companies. That is why the recent High Court decision in Hashmi v Lorimer-Wing could have such a widespread impact. The judge held that a sole director cannot run a company if it has a provision in its Articles of Association requiring it to have multiple directors. This decision could mean that any company with a sole director and unamended “Model Articles” may have been making decisions unlawfully, and those decisions may potentially be invalid and unenforceable.

It remains to be seen if this decision will be appealed, upheld or even overturned but in the meantime, it leaves many companies unsure of their current position. If you are a sole director of a company, it would be prudent to have your Articles reviewed and if necessary amended to remove any provisions requiring the company to have multiple directors. For more information, please contact Mark Williams.

Click here to see update dated 03/11/2022

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