The s.994 jurisdiction where a member's shares are compulsorily acquired under the company's own machinery. Unfairness is measured against the bargain in the articles rather than at large. O'Neill v Phillips; Re Charterhouse Capital Ltd.
Just and equitable winding up; quasi-partnership; equitable constraints on strict legal rights. Lord Wilberforce held that a limited company is more than a mere legal entity: there is room in company law for recognition of the fact that behind it there are individuals with rights, expectations and obligations inter se which are not necessarily submerged in the company structure. Equitable considerations may make it unjust to insist on strict legal rights, typically where there is a personal relationship involving mutual confidence, an agreement that some or all shareholders participate in management, and restrictions on the transfer of shares. A member excluded from management may complain even though the majority acted in good faith and in the interests of the company. The foundation of the modern quasi-partnership doctrine and of the s.994 jurisdiction. [Summary not yet checked against the judgment.]
Cited by
References found in the judgments’ text, with the number of paragraphs in which each case is mentioned. Not a classification: how a case was treated is recorded under Later history.
Unfair prejudice; s.459 Companies Act 1985 (now s.994 Companies Act 2006). Lord Hoffmann held that unfairness is judged against the terms on which the parties agreed the company's affairs would be conducted, found in the articles and any collateral agreement, and against the equitable constraints which make it unfair to rely on strict legal rights. There is no free-floating concept of unfairness. Two situations are contemplated: departure from the agreed terms, and use of the rules in a way equity would not permit. The requirement that prejudice be suffered as a member should not be too narrowly or technically construed. In an exclusion case the unfairness lies not in the exclusion alone but in exclusion without a fair offer to buy the minority out. The leading modern authority. [Summary not yet checked against the judgment.]
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References found in the judgments’ text, with the number of paragraphs in which each case is mentioned. Not a classification: how a case was treated is recorded under Later history.
Unfair prejudice; pleading; conduct of the company's affairs. A Practice Note decision of the Court of Appeal. The acts complained of must either be an act or omission of the company, or be conduct of the company's affairs rather than acts done in the conduct of a shareholder's personal affairs, and satisfaction of that requirement is not to be overlooked or minimised. Petitions and statements of case must make clear which limb of s.994 is relied upon and contain a concise statement of the facts relied on to make it out. A concise statement of personal acts of the respondents causally connected to an act or omission of the company may be included to support the primary allegation, but there is no justification for allegations of personal conduct which are not so connected. Graham v Every applied.
Cites
References found in the judgments’ text, with the number of paragraphs in which each case is mentioned. Not a classification: how a case was treated is recorded under Later history.
Directors' duties; good faith; s.172(1) Companies Act 2006. The Supreme Court held that the requirement of good faith in s.172(1) governs a director's conduct, not merely his state of mind. A director who covertly subverts a strategy resolved upon by the board, concealing his course of action and misleading his fellow directors, acts in bad faith towards the company notwithstanding a genuine belief that he is serving its best interests. Respect for business judgment (Re Smith and Fawcett; Regentcrest) attaches to the merits of a decision, not the manner of its covert pursuit. Where a fiduciary duty of loyalty applies, the duty itself supplies the analytical framework and elaboration by reference to Ivey dishonesty is unnecessary. Expressly approves Item Software v Fassihi and Shepherds Investments v Walters on disclosure as an aspect of the loyalty duty.
“A duty not covertly or otherwise to subvert the management of the company's affairs by the board as a whole is not expressly mentioned in section 172 or elsewhere in Chapter 2 as being, or being part of, one of the general duties. But in my view it is best regarded as part of the section 172 general duty, rather than something completely separate from it.”Lord Briggs (Lord Sales DP, at [42]
Cites
References found in the judgments’ text, with the number of paragraphs in which each case is mentioned. Not a classification: how a case was treated is recorded under Later history.