Russian Roulette vs Texas Shoot-Out: How to Compare a Single-Price Notice with a Sealed Bid

Compare a Russian-roulette notice with a Texas shoot-out by who names the price and who must buy. The single-price notice lets the recipient buy the offeror’s shares or sell its own at that price. Sealed bids make the higher bidder buy the other holding at its own bid. Clause 12’s heading chooses neither. Mark the blanks, then rewrite the clause or do not sign.

The heading also says nothing about a low price, silence, non-payment, or a directors’ casting vote.

Glaslyn Boards Ltd’s draft, dated 2 October 2026 and marked subject to contract, is a 50/50 private company limited by shares. English law applies in the courts of England and Wales. Clause 12 says: “If the Shareholders are deadlocked, either Shareholder may serve a Texas shoot-out notice.” It does not define deadlock or escalation, and it says nothing about price, bids, funds, default, a floor, or silence. Signature is due on Friday 23 October 2026.

A message on 14 October 2026 treats the labels as one election, silence as a sale, a low price as safe, and non-payment as a winding-up. It also treats model article 13 as the shareholder breaker. The model articles contain neither notice.

Disclaimer: Checkory provides AI support, not legal advice. Consult a qualified lawyer for binding decisions.

When can a holder serve the notice?

Serve the notice only after the clause defines deadlock and only after a written escalation has failed. One failed vote is not that test.

HFW, on 28 February 2019, requires escalation to named senior people within a set timeframe before any mechanism. Chambers, on 11 January 2023, treats deadlock as more than one ineffective vote. Article 13(1) gives a casting vote at a directors’ meeting, and articles 39 to 44 contain no members’ casting vote. Section 282 is a simple majority. An educational page reviewed on 4 October 2026 says that neither 50 per cent holder can pass a section 168 resolution alone. Clause 12 states none of that. A pending schedule banner on the legislation pages is not a buy-sell rule.

What does a single price let the recipient do?

On a single-price notice, one holder names one price. The recipient buys the offeror’s shares or sells its own at that price, and can force the offeror to buy. Clause 12 names no price and no election. The heading “Texas shoot-out” does not write that election into the clause.

HFW describes the offeror naming one price, because a low price can force the offeror to sell. LexisNexis describes the same election. Chamberlains, updated 21 November 2025, lets the recipient force the offeror to buy. A typical mistake is to treat both names as the one-price election, for example RLK on 1 August 2024. A US note of 4 October 2026 and a Frankfurt note of 4 February 2026 swap the labels. That swap is not English law.

What must the higher bidder buy under sealed bids?

In the sealed-bid notice HFW describes, both holders bid and the higher bidder must buy the other holding at its own bid. A counter-offer, an open auction, and a Dutch sell-bid at the loser’s price are not that notice. Clause 12 names no referee and no bid.

HFW describes sealed offers opened together by the auditors or an accounting firm, and the highest bidder buys at its stated price. Who may serve the notice is a drafting choice, not a Companies Act rule. The highest price per share wins. Spanish dissolution law and a South African day count do not apply to this clause.

What must the clause say about funds, completion, default, and silence?

Proof of funds, a completion timetable, and a default if the winner does not pay are separate requirements. Silence is a sale only where the clause writes a deemed election and a response time. Clause 12 states none of them. Non-payment does not wind the company up.

If the recipient misses a specified time, LexisNexis says a typical clause may deem a sale. Seegman says the labels differ, so the clause should state the response period, the effect of silence, evidence of funds, closing, and the default. If the winner defaults, write a purchase at the other bid or a damages claim. HFW treats liquidation as a last resort when no mechanism is triggered, not as the result of non-payment.

When does funding call for a floor, sealed bids, or a refusal?

A single price fits where both holders can realistically be the buyer. Unequal funding points to sealed bids or an independent valuation, and the bids still need proof of funds. Where one holder cannot be the buyer, write a floor or refuse that notice. Clause 12 has no floor.

HFW says a deep-pocket holder may name a low price, and a weaker holder may insist on a minimum floor. Comparable means are the setting for one price. Do not treat the other holder’s ability to pay as a reason to accept a low price. A German note of 28 March 2019 discusses a book-value floor and Nuremberg 12 U 49/13, not a rule here. An independent valuation still has to say who buys.

What goes in the log before you rewrite clause 12 or leave it unsigned?

Before Friday 23 October 2026, the log names the mechanic or records that clause 12 names neither. It lists what is missing: deadlock, escalation, the referee, funds, completion, default, a floor, and silence. It also records that a directors’ casting vote does not break a members’ tie. Then rewrite clause 12 or do not sign.

Use this order: deadlock, the failed escalation, one mechanic, funds, completion, then default or a floor. A put requires a purchase at a stated or fair value. A call compels a sale. Drag-along versus tag-along is a different exit. A match-the-offer or a first bid is transfer pre-emption. See ROFR versus ROFO. Expert determination versus arbitration still has to say who buys. Section 994 does not replace the notice.

A first pass is a markup of clause 12 and the articles in document analysis. It is not the decision to sign. Signing on Friday does not supply the missing wording.