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Law Cases
Company Law Cases
Company Constitution Cases

Russell v Northern Bank Development Corp Ltd [1992] 1 WLR 588

Country:
United Kingdom
By Oxbridge Law Team
Lord Jauncey

  • Agreement between all 5 shareholders and company that share structure of company should not be altered unless certain procedures in agreement were complied with.

  • Resolution was proposed that was not compliant with agreement.

  • Claimant, a shareholder, sought declaration agreement was valid.

Lord Jauncey

  • Is permissible for shareholders to agree amongst themselves to exercise voting rights in manner which would be unlawful if they were binding upon company.

  • However company cannot validly deprive itself of power to amend its articles.

  • Hence:

    1. Agreement as between members and company is unenforceable

      • However it is severable from agreement as between shareholders.

    2. Agreement still valid as between shareholders.

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