The concept of a chairman's casting vote in the event of a tied member vote is well-established in company law. It is provided for in regulation 50 of the 1985 "Table A" model articles of association, which in turn has its origins in equivalent provisions dating from the mid-19th century.
Although there is little evidence to demonstrate how often a chairman's casting vote is used in practice to resolve a tie, the purpose of the provision is clear. A tied vote would be undesirable for a number of reasons; it might cause administrative inconvenience in terms of having to convene a further general meeting to vote on the relevant issue again, or might cause interruption or delay in a transaction which the company proposed to undertake (which could in turn result in lost business opportunities).
A tie would, of course, only be relevant in relation to a vote on an ordinary resolution, since a special resolution cannot be passed without a 75% majority in favour.
Some companies choose to exclude regulation 50 from their articles; this may be appropriate, for example, in a deadlocked joint venture company.
Section 282 CA 2006 appeared on its face to be uncontroversial, providing simply that an ordinary resolution passed at a meeting requires the support of a simple majority of members entitled to vote in person and duly appointed proxies. This gives statutory force, as from 1 October 2007, to the former common law requirement for an ordinary resolution.
Section 282 is supplemented by section 284, which provides, in effect, for one vote for each member in relation to each share held (subject to any special rights provided by the articles).
In response to queries from practitioners and representative bodies such as the Institute of Chartered Company Secretaries, the Department for Business Enterprise & Regulatory Reform published a response to "frequently asked questions" confirming that the effect of the new provision requiring a simple majority of member votes to pass an ordinary resolution would override any casting vote provisions in the articles. It seems that this was unintentional.
After further lobbying, a provision has been included in the fifth CA 2006 commencement order (The Companies Act 2006 (Commencement No. 5, Transitional Provisions and Savings) Order 2007) which partially addresses the issue. This states that companies whose articles provided for a chairman's casting vote immediately before 1 October 2007 may continue to rely on the relevant article notwithstanding CA 2006.
Furthermore, any such company which then amended its articles to remove the casting vote (whether or not in the belief that it was ineffective under CA 2006) may reinstate the provision and continue to rely on it. But other companies, including any incorporated on or after 1 October 2007, cannot rely on a chairman's casting vote provided for in their articles (at least in the absence of very careful drafting where the chairman is a member in his own right and has a vote as such).
When CA 2006 was originally enacted, the Government announced that it recognised that such a huge and far-reaching piece of legislation might involve unintended changes to existing statutory or common law rules. It promised that any such unintended changes would be reversed by further legislation. Has this commitment been fully honoured?
We consider the action you should take in the light of this issue, which potentially affects most private and even some public companies.
If your articles of association provide for a chairman's casting vote at general meetings and your company was formed before 1 October 2007, it seems you need take no action. The only exception would be if you had amended your articles to remove the casting vote on or after 1 October 2007 and now wish to reinstate the provision.
You may do so at any time by appropriate special resolution (but note that the only effective change is to restore the provision which was removed, not any other wording).
In other cases, if you are concerned that your articles do not provide for resolving tied votes on ordinary resolutions, you may need to consider alternative provisions with your legal advisers.