Read the full judgment text of HCA 001038/1984 on BabelCite. This High Court CFI judgment was delivered on 21 March 1985 before Macdougall J.
Company law – company limited by guarantee – school – power to admit members – construction of articles of association – whether directors have power to increase membership – Companies Ordinance section 10(3) and Table C – oppression of minority members. The 1st defendant, Yau Kung School, was incorporated in 1962 as a company limited by guarantee; at its first directors' meeting the seven founding directors (one from each of seven village Tsun districts) resolved that each district should have an equal number of members, and a 1963 general meeting ratified this to comply with the constitution; a 1972 AGM further resolved that school representatives should be limited to three per Tsun district, subject to inclusion of the original seven subscribers. On 20 November 1983 the directors purported to admit the 11th to 14th defendants as members, creating inequality between districts, and an EGM on 23 December 1983 approved that action with the votes of the newly admitted defendants. The plaintiffs, suing personally and representatively, claimed the resolutions were null and void, alternatively oppressive. By consent, three preliminary issues were ordered to be tried. Held, first preliminary issue: the directors did not have the power under the articles to increase the membership of the school. Article 3 of the articles merely gave the directors the power to register an increase of members with the Registrar so as to comply with section 10(3) of the Companies Ordinance, and did not confer a power to admit members. Article 4 deliberately departed from the wording of the corresponding Table C Article 3 by omitting the express power of the directors to admit members, and no such power was re-conferred in the general management powers conferred by Articles 30 and 31; paragraph (h) of Article 31 was directed only to administrative matters, and Article 32 imposed no duty to record admissions of members. The second and third preliminary issues (whether the directors could override the 1963 and 1972 members' resolutions, and whether the 23 December 1983 EGM resolutions were void for want of proper notice under Article 9 of the memorandum) did not therefore fall to be answered, and the trial of the remaining issues was stayed pending determination of these preliminary issues. Order: first preliminary issue answered in the negative; second and third issues not determined; further trial stayed.
Legal issues: Directors' power to increase the number of members of the school under the articles of association · Whether directors could use any such power to override the general meeting resolutions of 19 January 1963 and 26 January 1972 · Validity of the EGM resolutions of 23 December 1983 for want of proper notice
Outcome: The first preliminary issue is answered in the negative: the directors did not have the power under the articles of association to increase the number of members of the school. The second and third preliminary issues do not fall to be answered. The trial of the remaining issues is stayed pending further order.