The Duomatic Principle: informal unanimous consent
by Sharon Fryer & Emma Halton
Where shareholders do not pass a formal resolution approving a matter, but unanimously indicate their consent in some other way, that consent will in many circumstances be as valid and effective as if they had passed a resolution. This is often referred to as the “Duomatic principle”1 and it was recently considered and applied by the Court of Appeal.2
A company (BWE) had a sole director who held 75% of the company’s shares on bare trust for his father. The other 25% of the company’s shares were registered in the name of a company (Belvedere) which had subsequently been dissolved. The articles of association of BWE required a quorum of two directors for board meetings. The sole director purported to appoint administrators, a step which required the consent of the company (i.e. the members) or its directors.3
The Court of Appeal held that the purposed appointment was not valid because:
- The Duomatic principle requires the unanimous assent of all shareholders who have a right to attend and vote at a general meeting, not simply those that may be available. Belvedere remained a registered shareholder notwithstanding its dissolution. Therefore, as it did not consent (being incapable of doing so), there had not been unanimous shareholder consent.
- To allow a sole director to act, an amendment to the articles of association of BWE would be required. No shareholder resolution had been passed, so any such amendment could only have taken effect by the application of the Duomatic principle. Again, without Belvedere’s consent, no such variation had been made.
This judgment serves as a clear reminder of the foundation of the Duomatic principle – the unanimous consent of all of the members entitled to vote on the matter. A company’s members are its initial subscribers (if they remain members) and the people listed in its register of members.4 This judgment decrees a strict interpretation; deceased or dissolved shareholders remain members of the company until their successors are registered as members.
This is an important reminder that, even in private companies with a small number of interconnected participants, proper procedures still have to be followed.
If you have any questions about any of the issues raised in this article, please contact Sharon Fryer, whose details appear below.
 Re Duomatic Ltd  2 Ch 365
 Randhawa and another v Turpin and another  EWCA Civ 1201
 Insolvency Act 1986, Schedule B1, paragraph 22(2)
 Companies Act 2006, section 112