The relevant exercise of power here concerned the Companies Act 2006, s.793, which allows a listed company to require a person to confirm if he is “interested in the company’s shares”4 (as well as any agreements or arrangements under which another person is entitled to control the exercise of any rights conferred by the holding of those shares). Section 794 then empowers a court to restrict the exercise of rights attaching to those shares where the person interested in them fails to comply with a disclosure notice.

The issue in Eclairs was whether the board of JKX, an English company listed on the London Stock Exchange, had properly exercised its additional power (conferred by the company’s articles) in itself imposing voting and share transfer restrictions5 at an AGM on certain shareholders incorporated in the British Virgin Islands (Eclairs Group Ltd and Glengary Overseas Ltd) and the individuals behind them. Article 42 entitled the board to impose these restrictions pursuant to a s.793 notice, “where the board knows or has reasonable cause to believe that the information provided is false or materially incorrect”.6 JKX argued that its board should only be tested in the performance of its duties by whether its directors acted in the company’s best interest, even if the purpose of the power here was to compel disclosure (and not, as was the case with the majority of the board,7 simply to stop the shareholders from preventing some resolutions, which they firmly believed to be in JKX’s best interest, from being passed).