Company needed urgent capital. Shareholders, holding 98% of shares, were willing to put money up on condition that they could buy out remaining 2% of shareholders.
Majority proposed special resolution adding provision to articles to effect that any shareholder was bound to transfer his shares upon request from the holders of over 90% of shares.
Claimant, part of the 2%, challenged it.
Majority had acted in good faith when proposing the resolution.
However provision was not for benefit of company as a whole, but simply for benefit of majority.
Therefore alteration of articles was invalid.
Very objective test. Notwithstanding majority’s good faith, were held not to be acting in interests of company.
Ambitious and intelligent students
choose Oxbridge Notes.
©2024 Oxbridge Notes. All right reserved.