Entrenchment of articles (CA 2006 s.22) and amendment by special resolution (s.21)

A private company limited by shares has four shareholders, each holding 25% of the issued ordinary shares. The company adopted bespoke articles on incorporation. One article provides that the company may not borrow more than £100,000 without the unanimous consent of all members. The article also states that no part of this article, including this requirement for unanimous agreement to amendment, may be removed or altered without the agreement of all four members. The directors now wish to take out a £250,000 bank loan to fund expansion. Three of the four members support both the loan and removing the borrowing cap; the fourth member refuses to agree to either. The supportive members ask whether they can pass a special resolution to delete the borrowing-limit article and then proceed with the loan.