The court held that the payments were to be regarded as properly authorised because they had been made with the full knowledge and consent of all the shareholders.
Whether the approval is given in advance or after the event, whether it is characterised as agreement, ratification, waiver, or estoppel, and whether members of the group give their consent in different ways at different times, does not matter.The application of the Duomatic principle contains two core requirements:[1] Furthermore, subsequent cases indicate that there must be some outward manifestation of the consent, either in the form of a document, a statement or by conduct.
Further, for a mere internal decision, unaccompanied by outward manifestation or acquiescence, to be enough would, as it seems to me, give rise to unacceptable uncertainty and, potentially, provide opportunities for abuse.
A company may change hands or enter into an insolvency procedure; in either event, it is desirable that past decisions should be objectively verifiable.
An objective approach must, I think, also have a role with the Duomatic principle.In subsequent cases courts have expanded the general principle to also apply to a wider array of situations.