Breckland Group v London and Suffolk [1989] BCLC 100

Court: High Court

Facts: The company’s articles stated that management was to be conducted by the directors. The shareholders had a separate agreement that litigation could only be initiated with the directors' consent. A majority shareholder initiated legal action on behalf of the company, and another shareholder sought to restrain this action.

Issue: Can shareholders intervene in management decisions delegated to the board by the articles?

Held: The High Court held in favor of the shareholder seeking restraint. It was found that the decision to bring the action was within the board’s purview, not the shareholders'.

Key Judicial Statement: Harman J noted, “The conduct of the business by the directors…is not a matter where the general meeting can intervene.”

💡 Leveluplaw: Shareholders cannot directly intervene in decisions related to company management if the articles delegate such powers to the board. Actions that fall within the board's management authority must be handled by the board, and shareholders' agreements cannot override this delegation.