A recent Court of Appeal case, Satyam Enterprises Ltd v Burton  EWCA Civ 287, followed a previous Privy Council decision that the Duomatic principle would apply where the ultimate beneficial owner and not the registered shareholder makes the decisions in a transaction.
Under the common law principle of informal unanimous agreement, widely known as the Duomatic principle, where it can be shown that all shareholders who have a right to attend and vote at a general meeting of a company agree to a matter which a general meeting of the company could carry into effect, that assent is as binding as a resolution in general meeting would be. In certain circumstances, the Duomatic principle therefore provides that shareholder approval for matters can be granted without the necessary formalities being followed.
In this case, the shares in a company were held by an individual on trust for a separate company. The registered shareholder was therefore different from the ultimate beneficial owner of the shares.
There has previously been some uncertainty as to whether the assent of the beneficial owner (rather than the registered holder) of a share would be sufficient for the Duomatic principle to apply but this Court of Appeal decision regarding beneficial ownership would appear to settle that.
While it is perhaps not something which will come up as an issue too often, it is still useful to clarify this aspect of the Duomatic principle.
Categorised in: Case Updates, Corporate and Commercial, NewsTags: Company Law, Shareholders