Key Takeaway

In Webster v ESMS Global Ltd [2025] EWHC 3107 (Ch), the High Court confirmed that shareholders have an enforceable right to require the circulation of written resolutions under Companies Act 2006 (sections 292–293). Where directors refuse, the court may grant injunctive and declaratory relief, not withstanding the existence of criminal sanctions. The decision strengthens minority shareholder protections in deadlock situations and clarifies that statutory duties may confer private rights.

What were the key facts of Webster v ESMS?

This case concerned a company formed to acquire an information service related to medical toxicology. 47.6% of the shares were controlled by a Mr and Mrs Webster, and another 47.6% were controlled by a Mr and Mrs Sood. The difference, 4.8%, was held in trust. All four of them were the company’s directors.

During the course of the acquisition, the relationship between the Websters and the Soods broke down, with the board reaching deadlock and no progress being made towards an outcome. To end the deadlock, the Websters proposed that a fifth, independent director, be appointed. Therefore, the Websters sent the company a formal request to circulate a written resolution to its shareholders under Section 292 of the Companies Act 2006. The Soods refused to circulate the resolution.

The Websters requested a court injunction to compel the company to distribute the proposal, or alternatively, to permit them as shareholders to distribute it on their own. The Soods pointed out that the Act includes other mechanisms, like general meetings under Section 303, which allow action to be taken unilaterally if the company does not respond.

However, there is no specific authority granted for shareholders to circulate a written resolution.

They contended that this suggests shareholders are not intended to do so. In this case, the Websters had even deposited a nominal sum to meet the statutory requirements for circulation and identified a willing independent director candidate, yet the defendants resisted on technical grounds and raised a jurisdictional challenge emphasising the deadlock was both legal and practical.

Read more on protecting your legal interests in an acquisition.

Can shareholders force circulation of a written resolution?

In the outcome for Webster v ESMS Global, the court granted the injunction proposed by the Websters, under the judgment that Section 292 confers actionable rights against the company, not obligations that happen to benefit the company’s members. The judge explicitly rejected the argument that the existence of criminal sanctions for non-compliance precluded civil relief, confirming that criminal penalties protect the public interest, whereas civil remedies are necessary to vindicate private shareholder rights.

It was recognised that failure to circulate a written resolution has criminal sanctions, but these protect public rights and are inadequate for vindicating private rights. For more, read our blog on company-shareholder relationships in the post-‘Shareholder Rule’ era.

What does Webster v ESMS mean for shareholders and directors?

This decision is a pragmatic one, and as said it illustrates the court’s willingness to protect shareholder interests. At first, it tackles a vague point in the Companies Act 2006: shareholders can ask for a general meeting if the board refuses to set one up, but there's no clause that lets them send around a written resolution. This could be to allow for discussion, and a general meeting allows for discussion and debate on decisions, here a written resolution would not.

For practical advisers, the decision also serves as a reminder that statutory rights must be viewed holistically: where Parliament imposes a duty with criminal sanctions, courts may still interpret that duty as giving rise to a civil remedy where needed to fulfil the statutory purpose.

This reflects an important part of managing a company, recognising the views of your shareholders and using them to help decide the direction of a company. The court’s decision in this case does not grant shareholders a one size fits all remedy, instead addressing the gap in the law and granting aggrieved shareholders the chance for their resolution to be circulated.

Certainly, in circumstances where the shareholders are aggrieved, they will need to apply for an injunction. This is time consuming and costly. In order to make this process smooth, clients should take adequate care to keep record of meetings and decisions and prepare in advance. If it looks like a deadlock could result in a scenario like this, then clients should prepare in advance to make sure that their solicitors are informed and aware, so action can be swift.

How should companies manage shareholder deadlock going forward?

Shareholders should be prepared for all circumstances, and this judgement gives them another set of circumstances to prepare for. Deadlock is a troubling circumstance to be in for any businesses and resolving it as amicably as possible is important. This judgement allows for businesses in deadlock to work internally to fix the solutions, whilst also making sure that the views of shareholders are respected and understood, which is essential for businesses.

Please contact the experienced Dispute Resolution team at Barnes Law for advice on shareholder dispute strategy.

Authored by Barnes Law Managing Partner, Yulia Barnes.