If you are the sole director of a UK company operating under the default “Model Articles” of Association, recent High Court rulings have scrutinised whether you have the legal authority to make decisions alone. While the latest ruling (Re KRF Services, 2024) confirms that sole directors using unamended Model Articles can act unilaterally, companies with modified articles, or those facing high-stakes decisions, still carry significant legal risk.

To protect past and future decisions, sole directors must understand this legal clash and take proactive steps to audit their company’s constitution.

The Clash in the Model Articles

For private limited companies in England and Wales, the default Companies Act 2006 “Model Articles” are often adopted upon incorporation. However, a legal grey area exists between two specific articles regarding board decisions:

• Article 7(2) (The Exception): States that if a company has only one director, the general rules of decision-making do not apply, allowing the sole director to make decisions alone.
• Article 11(2) (The Quorum): States that the quorum (minimum number of directors) for a valid board meeting must never be less than two.

Historically, the industry assumed Article 7(2) overrode Article 11(2). However, a series of recent High Court cases challenged this assumption.

Timeline of Key High Court Decisions

The Shockwave: Hashmi v Lorimer-Wing (Feb 2022)

• The Facts: A company with bespoke (modified) articles required a quorum of two directors.
• The Ruling: The High Court ruled that a sole director’s decisions were invalid because the bespoke quorum provision implied a requirement for at least two directors.
• The Impact: The judge suggested that even under unamended Model Articles, Article 11(2) could require a company to have two directors, putting the decisions of thousands of sole directors at risk of being challenged as ultra vires (beyond their legal powers).

The Partial Relief: Re Active Wear Ltd (Sep 2022)

• The Facts: A company had unamended Model Articles and had always operated with a single director.
• The Ruling: The judge distinguished this from Hashmi, stating that for completely unamended articles, Article 7(2) allows a sole director to act alone.
• The Catch: The judge implied that if a company previously had multiple directors and dropped down to one, the sole director might lose their unilateral power.

The Current Standard: Re KRF Services (UK) Ltd (Nov 2024)

• The Facts: A company with unamended Model Articles previously had multiple directors, but resignations left it with only one.
• The Ruling: The court ruled that Article 7(2) disapplies the quorum requirement in Article 11(2) regardless of the company’s historical director count.
• The Takeaway: As long as the company currently “only has” one director and no bespoke provision requires more, the sole director can make valid decisions.

Why Risk Still Persists in 2026

While KRF Services shifted the landscape from alarm to relative calm, vulnerabilities remain for UK sole directors:

1. No Binding Precedent: All three cases are first-instance High Court decisions. While highly persuasive, they are not strictly binding on future courts until a Court of Appeal ruling provides absolute finality.
2. Bespoke Articles Remain Vulnerable: If your company has any modifications to its articles (especially regarding quorums), the protective ruling of KRF Services may not apply, and you fall back into the high-risk category established by Hashmi.
3. Contentious Scenarios: In insolvency proceedings, high-stakes transactions, or shareholder disputes, opponents may still attempt to weaponise this legal uncertainty to challenge your decisions.

How Sole Directors Can Protect Themselves

To mitigate operational and legal risks, sole directors should take proactive steps immediately:

• Review Your Articles: Audit your constitution to determine if you are using unamended Model Articles or if there are bespoke provisions (specifically regarding minimum directors or quorums).
• Amend the Articles (Highly Recommended): Pass a special resolution (75% shareholder approval) to explicitly allow sole-director decision-making. This usually involves modifying Article 11(2) to set a quorum of one, or adding a clause confirming Article 7(2) takes precedence.
• Ratify Past Decisions: Pass a shareholder resolution to ratify all historical decisions made by the sole director, particularly those between February 2022 and November 2024, providing a safety net against future litigation.
• Consider a Second Director: Where practical, appointing a trusted second director can bypass the legal ambiguity entirely.

Need Expert Guidance?

If you’re a sole director, now is the time to audit your company’s constitution and ensure your decisions stand on solid ground.

If you would like assistance or more detailed advice on any of the matters discussed, please contact us on 0800 0284 396 to arrange a consultation.