PNC Telecom Plc v Thomas
| Jurisdiction | England & Wales |
| Judge | 1. THE VICE-CHANCELLOR |
| Judgment Date | 19 December 2002 |
| Neutral Citation | [2002] EWHC 2848 (Ch) |
| Docket Number | No: HC02C03721 |
| Court | Chancery Division |
| Date | 19 December 2002 |
[2002] EWHC 2848 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Royal Courts of Justice
Field House
London
the Vice-chancellor
No: HC02C03721
MR MICHAEL TODD QC & MS CATHERINE ROBERTS (Instructed by Messrs Bircham Dyson Bell, London SW1) appeared on behalf of the Claimant
MR PHILIP HESLOP QC & MR CHARLES MARQUAND (Instructed by Olswang) appeared on behalf of the Defendant
Thursday, 19 th December 2002
This is an application by the claimant PNC Telecom Plc for declarations as to the invalidity of a meeting of its members the defendants claim to have validly convened under Section 368 Companies Act 1985 for the 30 th December 2002.
PNC, as I will call it, was incorporated on 27 th April 1992 to carry on business as a retail and wholesale provider of mobile telephones. Since 2000, its shares have been quoted on the London Stock Exchange. On 23 rd April 2001 its leading light and chief executive officer, the first defendant, Mr Thomas, left.
On 8 th November 2002 there was received by means of a fax at the registered office of PNC a letter signed by Mr Thomas and on behalf of Strand Nominees (who between them it is accepted hold 17.6 per cent of the issued share capital of PNC) addressed to the board of directors and company secretary in these terms:
"Dear Sirs,
Removal and Appointment of Directors
The undersigned are shareholders who, at the date of deposit of this requisition at the registered office of PNC Telecom Plc hold not less than one tenth of the paid up capital of the Company carrying the right to vote at general meetings of the Company.
This letter constitutes notice under Section 368 of the Companies Act 1985 ("Act") which requires the Company to forthwith proceed duly to convene an extraordinary general meeting to propose to shareholders ordinary resolutions (under Section 303 of the Act) and further constitutes notice to move such resolutions in accordance with Section 379 of the Act. The resolutions proposed are that:
(1) the following directors be removed from their office as directors of the Company:
(a) Lord Stevens of Ludgate;
(b) Ian Gray;
(c) Christopher Mills;
(d) John Peett; and
(e) Peter Dicks.
(2) and the following persons be appointed as directors of the Company:
(a) Geremy Thomas;
(b) Peter Scrancher;
(c) Colin Hermiman; and
(d) Jeffrey Pack ."
On 25 th November 2002, Olswangs, the solicitors acting for the defendants, sent the original of that requisition by registered post to PNC at its registered office and requested a copy of PNC's share register pursuant to Section 219(2) Companies Act 1985. That letter and the original requisition it contained was received at PNC's registered office on 26 th November 2002. There was intermediate correspondence which I need not mention.
On 6 th December 2002, Mr Thomas sent a circular to the members of PNC together with a notice purporting to convene a meeting of the members for 30 th December 2002, a notice indicating the resolutions to be proposed at that meeting which correctly set out nine separate resolutions for either the removal of the first five individuals or for the appointment of the last four individuals. It so happens that on the same date a counter-statement to the members of PNC was sent by Lord Stevens of Ludgate, as it were, as a counter to that which Mr Thomas had sent out.
The application now before me was issued on 12 th December 2002. The relief sought is to the effect that the faxed requisition received on 8 th November 2002 was not properly deposited within the meaning of the Act and that the meeting set up by the defendants could not conduct any valid business in accordance with that letter.
7. Thus the case for PNC depends on two propositions: (1) that the requisition required by Section 368 Companies Act 1985 must be deposited either in person or by post at the registered office, transmission by fax not being permissible, and
(2) that the resolutions to be proposed as indicated in the requisition could not be validly passed anyway because they do not comply with Section 303 regarding removal or Section 292 regarding the appointment of directors of a public company.
These contentions are opposed by counsel for the defendants on the footing that Section 368 does permit the deposit of a requisition by fax, that section only requires the object of the meeting to be stated in the requisition and that the requisition itself adequately expressed the object and did not limit the directors to two resolutions which might be invalid, but, obviously, contemplated nine resolutions as to which no question could be raised.
I start by quoting the relevant terms of Section 368. It is headed "Extraordinary General Meeting on Members Requisition" and proceeds:
"(1) the directors of a company shall, on a members' requisition, forthwith proceed duly to convene an extraordinary general meeting of the company.
This applies notwithstanding anything in the company's articles."
Sub-section 2 deals with the necessary number of members who are capable of making a requisition �that is not in issue, so I pass to sub-section 3 which provides:
"The requisition must state the objects of the meeting, and must be signed by the requisitionists and deposited at the registered office of the company, and may consist of several documents in like form each signed by one or more requisitionists."
Sub-section 4 provides that:
"If the directors do not within 21 days of the date of the deposit of the requisition proceed duly to convene a meeting, the requisitionists, or any of them representing more than one half of the total voting rights of all of them, may themselves convene a meeting, but any meeting so convened shall not be held after the expiration of 3 months from that date."
I do not think I need read the rest of that section.
It is clear, therefore, that there are three requirements for a valid requisition. First, "deposit", second, a statement of the objects and third, signature of the requisitionists. PNC accepts, subject to the second point I have already mentioned, that the second and third of those requirements are complied with. The debate is whether the requisition was deposited for the purposes of the Act. Counsel for PNC has demonstrated how the Companies Act 1985 uses a variety of verbs to describe essentially the same process, namely "deliver", "send", "furnish", "give notice" and "deposit". The verb "deposit" is also used in Sections 214(1), 253(2) and 377(1). Counsel submits that those contexts suggest that the word "deposit" may import more formality than the others but he accepts that a deposit by means of the Royal Mail will suffice in all cases.
Section 214 deals with company investigations on the requisition of members. It enables a certain proportion of members to demand the investigation of the company's affairs, and the mechanics for doing that is "the deposit of the requisition of that proportion".
Section 253 deals with the right of a shareholder to require the laying of certain accounts. That provides in sub-section 2 that before the end of the period of 28 days beginning with the date on which the accounts and reports are sent out any member or auditor of the company may by notice in writing deposited at the registered office of the company require that a general meeting be held for the purpose of laying the accounts...
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