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Citco Banking Corporation v Pusser’s Ltd [2007] UKPC 13

Country:
United Kingdom
By Oxbridge Law Team
Lord Hoffmann
Facts
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  • Was a special resolution to amend articles so as to create a category of class B shares, which had 50 votes per share (as opposed to class A shares, which had one vote each).

  • Additional special resolution was passed so as to convert shares of chairman of company into class B shares; this was to ensure that chairman of company remained in absolute control of company.

  • Claimant challenged on basis that resolutions had not been passed bona fide in best interests of company, but simply to benefit chairman.

Lord Hoffmann

  • Nature of test is subjective.

  • For valid challenge to resolution, shareholders must have acted in way that impugns their:

    • Conscience (dishonesty); or

    • Sanity (irrationality)

  • Court should avoid analysis of actual commercial benefits to company of alteration.

  • Test operates the same regardless of whether alteration is advantageous to shareholders or disadvantageous.

  • Gambotto has no support in English authority.

Facts

  • If those voting in favour of the special resolutions genuinely though alteration was for benefit of company as a whole, resolutions are valid.

  • As they appeared to, alterations are valid.

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