Case Law - Part 2

Question 1

Weighted voting rights

Answer 1

Bushell v Faith (1970)

Question 2

Article 3 vests powers of management in the board and members cannot intervene by instructing members to act or refrain from acting

Answer 2

Automatic Self-Cleansing Filter Syndicate Co Ltd v Cuninghame (1906)

Question 3

As article 3 is subject to articles, articles can be amended to alter the balance of power between the board and its members

Answer 3

Salmon v Quin & Axtens Ltd (1909)

• Articles stated board resolution relating to property acquisition could be vetoed

Question 4

The company secretary is ‘an officer of the company with extensive duties and responsibilities’

Answer 4

Panorama Developments
(Guildford) Ltd v Fidelis Furnishing Fabrics Ltd (1971)

Question 5

s.172 case law directors had to compensate the company for losses sustained due to breach

Answer 5

Extrasure Travel Insurance Ltd v Scattergood (2003)

Question 6

s.173 case law (no breach)

Answer 6

Fulham Football Club Ltd v Cabra Estates plc (1992)

• No breach will occur where
  a director acts in accordance with an agreement duly entered into by the company that restricts the future exercise of discretion by its directors (s.173 2a)

Question 7

s.175 case law

Answer 7

Bhullar v Bhullar (2003)

• S had a duty to inform the company of the opportunity so that it could decide whether to acquire the property or not.
• By failing to do so, the s. 175 duty had been breached. The fact that the company had agreed not to acquire any more properties was irrelevant

Question 8

s.239 Ratification case law

The ratification of the members must be informed

Answer 8

Knight v Frost (1999)

Question 9

s.239 Ratification case law and
S.172 no breach

The decision to ratify must be ‘honest, bona fide and in the best interest of the company’

Answer 9

Madoff Securities International Ltd
v Raven (2011)

Question 10

s.175 (1) case law covering both actual and potential conflicts

Answer 10

Boardman v Phipps (1967)

Question 11

s.175 (2)

Answer 11

Bhullar v Bhullar (2003)

Question 12

S.172 no breach case law

Answer 12

• Regentcrest plc v Cohen
  Director failed to hold back some money but believed it to be sensible for the business
• Madoff Securities International Ltd v Stephen Raven (2013)

Question 13

s.239 Ratification
Illegal acts cannot be ratified case law

Answer 13

Re Exchange Banking Co (Flitcrofts case, 1882)

Question 14

s.171(b) CA - Duty of directors to act for ‘proper purposes’

Answer 14

Howard Smith Ltd v Ampol Petroleum Ltd (1974)

• Purpose of allotment was for an improper purpose
• Directors held to be in breach
• Share allotment set aside

Question 15

CA 2006 - s.172 - Promote success of the company. Objective test limitations case law

Answer 15

Charterbridge Corporation Ltd v Lloyds Bank

Question 16

CA 2006 s.173 Duty to exercise independent judgment, and s.174 Duty to exercise reasonable care, skill and diligence (2) (a)- case law

Answer 16

Dorchester Finance Co v Stebbing

Failure to engage with managerial duties is not permissable

Question 17

CA 2006 s176 case law

Answer 17

Boston Deep Sea Fishing Co v Ansell

• Director could be summarily dismissed

Question 18

CA 2006 s.177 case law

Answer 18

Gwenbe Valley Development Co Ltd v Kohsy

• Managing director of joint venture company failed to disclose personal interest in transactions