High Court clarifies position of sole directors under Model Articles and the interaction between UK sanctions regulations and in-court appointment of administrators (Re KRF Services (UK) Ltd and others)
Restructuring & Insolvency analysis: This High Court case (which addresses two important issues in UK company law and sanctions regulations) will be of interest to insolvency practitioners, corporate and restructuring lawyers, sanctions lawyers, and businesses and individuals which are affected by sanctions. Firstly, it clarifies the position of sole directors under the Model Articles for private limited companies. The court ruled that a sole director can validly pass board resolutions and bind the company, regardless of whether they have always been the sole director or were previously part of a multi-member board. This interpretation resolves conflicts between Article 7(2) and Article 11(2) of the Model Articles, with the court favouring Article 7(2)'s provisions. Secondly, the case examines the interaction between UK sanctions regulations and the in-court appointment of administrators. The court determined that making an administration application and order does not breach asset-freezing sanctions, even when the company is designated or controlled by a sanctioned person. While an Office of Financial Sanctions Implementation (OFSI) license is typically required for administrators to act, the court retains discretion to make immediate appointments in urgent situations. Written by Joshua Ray and Duncan Henderson, partners at CANDEY, which acted for the First and Second Applicants on this matter.
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