xs
This website uses cookies to ensure you get the best experience on our website. Learn more
Law Cases
Company Law Cases
Company Constitution Cases

Brown v British Abrasive Wheel Co [1919] 1 ch 290

Country:
United Kingdom
By Oxbridge Law Team
Held

  • 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.

Held

  • 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.

Any comments or edits about this case?
Get in touch

Similar cases

Greenhalgh v Arderne Cinemas Ltd
Under company law, within a private company, where the articles contain provisions that restrict the transfer of shares to members, a majority resolution may be passed authorizing the sale of shares...
Dafen Tinplate Co v Llanelly Steel Co
Resolution inserted new article empowering majority to buy out “any shareholder as they thought proper” . Article was invalid. This because it was self-evidently wider than could be necessary in inte...
Right and Issue Investment Trust Ltd v Stylo Shoes Ltd
Company issued new shares. To ensure continuity of management, was decided to double voting rights on shares owned by managers so that they retained same degree of control. Resolution was challenged....
Sidebottom v Kershaw
Company altered its articles by adding provision allowing directors the power to buy out, at a fair price, any shareholder who competed with the business of the company. A minority shareholder, who c...
Howard Smith v Ampol Petroleum
Company was subject to rival takeover bids from two of its shareholders. One bidder had 55% of shares, but was clear that the other offer was better for company. Thus directors of company allotted $1...

Related free notes samples

Legal Capital Cases
Company law notes fully updated for recent exams in the UK. These notes cover all the major LLB compa

logo

Ambitious and intelligent students
choose Oxbridge Notes.

©2024 Oxbridge Notes. All right reserved.