With shareholder activism continuing to rise, the recent decision of the Judicial Committee of the Privy Council (JCPC): 1Globe Capital LLC v Sinovac Biotech Ltd [2025] UKPC 3, delivered on 16 January 2025, provides several useful reminders that boards should bear in mind if ambushed at a general meeting. Activist shareholders use their votes to influence corporate policies and management decisions to drive change.

Case summary:

The decision of the JCPC confirmed the outcome of an AGM which had been held in 2018. At this AGM a group of shareholders ambushed the AGM and sought the wholesale replacement of the incumbent board of directors (the incumbent directors) with an entirely new board (the new directors). The JCPC considered the lawfulness, propriety and consequences of the alleged ambush at the AGM.

The JCPC decided that despite the lack of advance notice of the shareholders’ intention to seek to replace the board, this did not undermine the validity of the votes cast at the AGM. Consequently, the JCPC confirmed that the incumbent directors had been replaced with effect from the AGM (despite every lower court disagreeing).

While the case was on appeal from the Court of Appeal of the Eastern Caribbean and raised some important points about the company law of Antigua and Barbuda, the JCPC decision is of relevance to companies around the globe.

Practical points:

Before the meeting

• Know your Articles! The starting point for an understanding about what is fair or unfair in any particular situation is set out in the company’s constitution in the context of the relevant statutory framework. Having a proper understanding of the company's constitution and relevant Companies Act provisions will ensure directors are well placed to deal with shareholder activism as it occurs.
• Ensure your Notice of Meetings is in order. Be mindful that wording around retirement by rotation and reappointment of directors when coupled with a general “Any other business” or "The annual meeting will also transact such other business as properly may be brought before it or any adjournment thereof" renders the appointment of replacements a possibility, even though it is not expressly stated. Directors and shareholders alike must appreciate that persons nominated for the first time at the meeting may get elected by those who attend, in person or by proxy.
• If in doubt, seek legal advice ahead of meetings or perhaps have a legal adviser attend the meeting (especially where it may become contentious).

During the meeting

• When conducting meetings keep an open mind. The JCPC observed that the transcript of the AGM suggested that “all those present, including the chair, were acting out parts prepared for them by their various lawyers, rather than thinking for themselves what really needed to be done”. Whilst the JCPC was at pains not to criticise those attending, it seems that no one exercised independent judgment. Had they done so the meeting may have been adjourned.
• Consider adjourning an ambushed general meeting. While proposals may lawfully be put to the meeting, even by way of ambush, it does not necessarily follow that it should be voted upon there and then. An adjournment will enable the board to take legal advice before resuming the meeting. It also allows the views of absent shareholders and proxies to be obtained. The adjournment should be for such time as will enable all shareholders to have an opportunity to make an informed decision on the matter in question, bearing in mind specific requirements about reconvening meetings as set out in the company’s constitution and the statutory framework. In this case had the Chair of the AGM adjourned the meeting (assuming it had power to do so under the relevant statutory framework), the legal proceedings spanning over six years could well have been avoided. Whether this would have ultimately altered the outcome is a moot point.

After the meeting when contemplating litigation

• When embarking on litigation ensure that all potential arguments are properly considered and aired (as considered appropriate at each stage after taking specialist legal advice). In this case the JCPC noted that there were multiple arguments that were not pursued on various issues - one such issue was the validity of the proxies. The JCPC did not decide that issue having determined that the company had, in effect, waived or abandoned the objection to the validity of the proxies.
• Consider carefully what you are seeking from the court. In this case each party adopted a high-risk strategy - each seeking only a determination wholly favourable to their cause, with neither suggesting the holding of a fresh meeting. This was presumably because neither party was confident of succeeding at a fresh AGM.

Conclusion

This case serves as a cautionary reminder for boards to remain vigilant and prepared for unexpected challenges at general meetings. It emphasises the importance of being prepared for shareholder activism and adhering to proper procedures to maintain the integrity of the decision-making process. By embracing these principles, boards can enhance their governance practices and better protect the interests of their companies and shareholders. If in doubt, we suggest directors seek legal advice on the position.

We at Stevens & Bolton are able to advise on all matters related to corporate governance and corporate disputes. We also offer clients a dedicated Company Secretarial service - so do get in touch with me or your usual Stevens & Bolton contact if you are seeking support with company issues.