shareholders’ resolution authorising company to issue an equity-based instrument to non-executive directors conditional on the successful financial close of a trade sale or initial public offering
successful trade sale of company completed
appellant resigned as non-executive director prior to trade sale
Quick Take
1A shareholders' resolution that 'authorises' the board to create and allot an equity-based instrument, with discretions as to timing and form, does not on its proper construction impose a mandatory obligation on the board to issue that instrument upon the occurrence of a specified condition; it permits but does not require the board to act.
2The identification of the instrument under which a shareholders' resolution is passed (here, a shareholders' agreement rather than the company constitution) is determined by the express terms of the resolution itself, and governs the division of functions between the board and the members in general meeting.
3Where the power to issue shares and equity-based instruments is vested in the board under the company's constitution, a shareholders' resolution authorising such issue under a shareholders' agreement does not transfer or delegate that power to the members, but removes a contractual precondition to the board's exercise of its existing power.
