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 same article states that this borrowing-limit provision may only be removed or altered with 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.