Jusan Technologies Limited v Uconinvest LLC

Section 40 of the Companies Act 2006 protects a person dealing with a company in good faith where the directors exceed constitutional limits on their powers. The protection is not confined to outsiders and may extend to shareholders, provided they are parties to a transaction or other act to which the company is also a party. Registration of a purchaser as shareholder may form part of the wider sale transaction rather than a separate unilateral act. A company seeking rectification under section 125 must prove that the directors lacked power to register. Even where registration was technically defective, the court retains a discretion to refuse rectification where the defect is remediable and the circumstances make rectification unjust or unmeritorious.

Jusan Technologies Limited sold 12,255,099 B ordinary shares to Uconinvest LLC under a share sale agreement. Its articles required a transferee either to execute an effective deed of adherence to the shareholders’ agreement or to obtain the prior consent of all A ordinary shareholders. Uconinvest executed a multipartite deed, but one shareholder did not, and Uconinvest was later registered.

Uconinvest subsequently relied on the ineffectiveness of the deed in related arbitration proceedings. Jusan brought this Part 8 claim under section 125 of the Companies Act 2006, seeking retrospective rectification of its register. The issues were whether the directors had power to register Uconinvest, whether section 40 protected the registration, and, alternatively, whether the court should exercise its discretion to refuse rectification.

1. Section 40 protection. Uconinvest was a person dealing with Jusan in good faith. Section 40 contains no express exclusion for directors or shareholders. Section 41 indicates that shareholders are not impliedly excluded, since it regulates transactions involving directors and preserves the rights of other parties.
2. Meaning of the transaction. The sale agreement, board resolutions and completion obligations showed that registration was part of the transaction by which Jusan sold the shares to Uconinvest so that Uconinvest would acquire registered title. It was not a discrete unilateral act comparable to a bonus issue. A person may therefore deal with a company in good faith where the excessive act is only one step in a wider bilateral transaction.
3. Effect. Section 40 deemed the directors’ power to bind Jusan free of the limitation in article 12(2). Jusan could not rely on the excessive exercise of the directors’ powers against Uconinvest. The claim for rectification consequently failed.
4. Alternative conclusion. The defect concerned an irregular exercise of directors’ powers, not Jusan’s corporate capacity. It was potentially remediable by member ratification or conduct amounting to approval, acquiescence, waiver or estoppel. The statutory discretion under section 125 was not confined to ordering rectification. There was at least a realistic prospect that rectification would be refused, given Jusan’s sale and warranties, Uconinvest’s compliance with what Jusan required, possible knowledge and approval by Jusan’s controllers, and the limited practical benefit of removal.
5. Disposition. The Part 8 claim was dismissed.

This was a first-instance Part 8 claim. The judgment records related proceedings in the same litigation, including the court’s earlier decision in [2024] EWHC 1632 (Ch), which refused a stay of Uconinvest’s unfair prejudice petition and dealt with a freezing injunction. The present claim was then tried on the limited issues directed on 8 October 2024.