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Draft with care

Debbie King considers two recent cases which highlight the need for scrutiny in drafting, the courts’ powers to rectify a company’s statutory registers, and new requirements for PSC information

21 September 2017

In Watson and others v Watchfinder.co.uk [2017] EWHC 1275, the meaning of ‘directors’ discretion’ was considered in the context of the exercise of a share option agreement.

A services agreement was entered into between the company (A) and another company (B), and three directors of B entered into share option agreements with A. Each option agreement included a clause stating: “The Option may only be exercised with the consent of a majority of the board of directors of the Company.”

When the option holders attempted to exercise their options, A’s directors refused to issue the shares, simply because they did not consent to their issue. The existing directors of A had a conflict of interest in that the allotment of the option shares would dilute their existing shareholdings, so the option holders issued ...

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