Hashmi v Lorimer-Wing – A key change for sole directors

By Brabners LLP

08 Mar 2023

Hashmi

This article looks at the implications for sole directors and their businesses following the recent Hashmi v Lorimer-Wing [2022] High Court case.

The case highlighted that sole directors may be at risk of being unable to make lawful decisions where Model Articles are adopted.  

What are Model Articles?

Articles of Association (Articles) are a set of rules that govern how a limited company operates - they regulate the powers, affairs and relationships of the directors, shareholders and the company itself.  Model Articles of Association (Model Articles), as governed by the Companies Act 2006, are a generic set of Articles that limited companies can choose to adopt.

Whilst many companies adopt Model Articles, as they are fairly suitable in most situations, recent case law has questioned the suitability of companies adopting Model Articles that only have a sole director.

Contrasting Articles

The High Court case of Hashmi v Lorimer-Wing [2022] examined whether a board decision made by a sole director of a company with Model Articles is in fact valid, or whether at least two directors are necessary to create a quorum (a minimum number of directors which is required in order for a board meeting to be held).

This is due to the subjective interpretation of Article 7(2) and 11(2) of the Model Articles. Article 7(2) effectively states that if a company has only one director, then that sole director is able to make decisions on behalf of the board. However, Article 11(2) contrastingly stipulates that the minimum number of directors required to hold a board meeting must be at least two.

Prior to the ruling in Hashmi v Lorimer-Wing, it was generally accepted that under the Model Articles, there should be at least two directors for a board meeting to be validly held. However, in circumstances where the company has only one sole director, then that sole director is capable of holding a board meeting and making decisions on behalf of the company. Because of this, many companies with a sole director were, and still are, incorporated with Model Articles.

However, since the court’s ruling in Hashmi v Lorimer-Wing, this general position has now changed.

Hashmi v Lorimer-Wing - A brief overview

In the case of Hashmi v Lorimer-Wing, a shareholder sought to challenge a claim made by a company which comprised of one sole director. The shareholder claimed that the company’s articles (which were based on the Model Articles) stipulated that there must be at least two directors for a board meeting to be valid and subsequently the decision made by the sole director should be voided.

Surprisingly, the court held that in such circumstances where a sole director company adopts Model Articles, one director is not sufficient for a board meeting to be held and decisions to be made. The court treated the phrase within Article 11(2) ‘The quorum for director’s meetings … must never be less than two’ as taking precedence over Article 7(2).

The implications following Hashmi v Lorimer-Wing

There are numerous issues which may arise for companies with a sole director following the decision in Hashmi v Lorimer-Wing. Although there is potential for this decision to be appealed / overturned, sole director companies with Model Articles need to be alive to the fact that the decisions made by the sole director may be invalid.

A simple rectification of this would be for the company to appoint another director to ensure all future board meetings are quorate and compliant with Model Article 11(2). However, in practice, this may not be suitable. Alternatively, another method of mitigating this issue would be to amend the company’s Articles to clearly include a provision that allows a quorate meeting to be formed with only one sole director present.

However, irrespective of whether an additional director is appointed, or the Articles are amended, any previous decisions made by a sole director may still be rendered invalid. To ensure the company is not implicated by this, previous sole director decisions should be ratified by the company shareholders.

Brabners in Lancashire is located at Sceptre Court, Walton Summit. If you would like to discuss anything raised in this article, please give us a ring on 01772 823921, quote “LBV” and a member of our team will be happy to assist you.  

If you would like to receive more content like this, please head to our website where you can subscribe to receive regular updates of current articles and events.

Latest news

1

Three weekly domestic waste collection considered in plans Waste recycling Blackpool

Three weekly domestic waste collection considered in plans

01 Jul 2025

2

Graham Engineering confirms sale to a2e Industries Graham Engineering

Graham Engineering confirms sale to a2e Industries

01 Jul 2025

3

Training 2000 celebrates 'Good' rating by Ofsted Training 2000

Training 2000 celebrates 'Good' rating by Ofsted

01 Jul 2025

4

Fox Group acquires J Fisher and Sons Colin Fisher, Paul Fox CEO and Gary Fisher.

Fox Group acquires J Fisher and Sons

01 Jul 2025

5

Beever and Struthers strengthen leadership team with new partners Dean Curtis and Joe Diston

Beever and Struthers strengthen leadership team with new partners

01 Jul 2025

Background image for hub sign up block

LBV Hub

Leverage Lancashire Business View platforms

Post your news
Post your events
Post your offers
Build your network
Improve your SEO
Gain coverage in the magazine
Sign-up
Events
LBV123 July/August Launch Event
Lancashire Business View magazine launch
Networking
16 Jul 2025

LBV123 July/August Launch Event

Burnley

08:30 - 10:30

Lancashire Built Environment Conference 2025
BEC 315 X 315 Px
Networking
25 Sep 2025

Lancashire Built Environment Conference 2025

Blackpool Football Club, Blackpool, FY1 6HX

08:30 - 13:00

CMI Level 5 Management and Leadership Course
UCLanAerialCampus.jpg.jpg
LBV Hub Seminars
21 Feb 2025 - 21 Feb 2026

CMI Level 5 Management and Leadership Course

Preston Campus, Preston , PR1 2HE

09:00 - 17:00

CMI Level 5 Project Management Course
UCLanAerialCampus.jpg.jpg
LBV Hub Seminars
21 Feb 2025 - 21 Feb 2026

CMI Level 5 Project Management Course

Preston Campus, Preston, PR1 2HE

08:00 - 17:00

Chamber Breakfast Networking – July
Chamber Logo1.png.png
LBV Hub Networking
02 Jul 2025 - 02 Jul 2025

Chamber Breakfast Networking – July

St John's Hospice, Slyne Road, Lancaster, LA2 6ST

08:00 - 10:00

The Marketing Metrics that Matter – July 4
LBV Hub Seminars
04 Jul 2025 - 04 Jul 2025

The Marketing Metrics that Matter – July 4

Door4 Office, Burnley Wharf, Burnley, BB11 1JG

08:30 - 11:00

Tri-Site Survey Equipment Showcase
unnamed (2).jpg.jpg
LBV Hub Seminars
09 Jul 2025 - 09 Jul 2025

Tri-Site Survey Equipment Showcase

Crow Wood Hotel, Burnley, BB12 0RT

09:30 - 16:00

Blackburn Cathedral hosts Champagne and Diamonds Event with Ainsworth Jewellers
Champagne-Jewellery 10 07 25_page-0001.jpg.jpg
LBV Hub Awards
10 Jul 2025 - 10 Jul 2025

Blackburn Cathedral hosts Champagne and Diamonds Event with Ainsworth Jewellers

Blackburn Cathedral, Blackburn, BB1 5AA

18:00 - 20:30

Choose Chorley for Business - Talent Reimagined Business Breakfast
talentreimaginedbb.png.png
LBV Hub Seminars
10 Jul 2025 - 10 Jul 2025

Choose Chorley for Business - Talent Reimagined Business Breakfast

Strawberry Fields Digital Hub, Chorley, PR71PS

08:00 - 10:30

Shaping Preston's future by remembering its past
1750160034867.png.png
LBV Hub Networking
16 Jul 2025 - 16 Jul 2025

Shaping Preston's future by remembering its past

Society1, Coworking Space, Preston, PR1 3LT

18:00 - 20:30

Chamber Summer BBQ
LBV Hub Social
17 Jul 2025 - 17 Jul 2025

Chamber Summer BBQ

The Borough, Dalton Square, Lancaster, LA1 1PP

17:30 - 20:00

Preston Tech Connection: Web3 is Dead. Or is It?
July Longer Banner.jpg.jpg
LBV Hub Networking
29 Jul 2025 - 29 Jul 2025

Preston Tech Connection: Web3 is Dead. Or is It?

Society1, Coworking Space, Preston, PR1 3LT

18:00 - 19:30

Advertise with us

Reaching 50,000 members, our print, digital and event platforms offer a fantastic way to raise your business profile and help you grow.

Find out more LBV122 Online Graphic
Subscribe now

Weekly news bulletin