Cases Flashcards
Hill V Perament
Can only reduce share capital as authorised by law, Can only make distributions to members out of profits
Its a wrap v Gula
director paid dividends instead of salary at time company not making profit. Court held: lack of knowledge of the law is not adequate. Aware circumstances when receive dividend is wrong then don’t need to understand CA prohibitions: must repay dividend
Exchange Banking Co Flintcroft’s case 1882
if authorise dividend and money cannot be recovered, then as director are personally liable to repay this.
George Newman Company 1895
cannot remunerate/give presents to directors out of capital or money borrowed by the company as this cannot be lawfully divided by shareholders themselves let alone given away to directors for nothing.
Trevor v Whitworth 1887:
company bought half his shares then he died, comp in liquidation. HOL: general rule: company cannot just agree to buy shares back from shareholders. If do will be void, can be criminal sanctions
Bushell v Faith 1969:
articles of association modified to allow weighted voting when dealing with removal of director. Net effect meant could not be removed if did not want to be. Court held that anything in articles that is not illegal will be upheld by court.
Salomon v Salmon 1897
sole trader sold his business to a new company he created. Had 7 shareholders so met legal requirements. Went into liquidation and a 3rd party had a secured debt of 10k which meant other creditors would receive nothing so liquidator tried to have this set aside. Held: as long as formed correctly, company and shareholders are treated as separate legal entities with limited liability. Not allowing this would mean sole traders/partnerships would not be able to convert to limited liability companies.
squash racquets club
minority shareholders brought a claim in unfair prejudice and court held that majority shareholders had to sell their shares to minority.
Re a company
to bring claim, must be member of company with name on the register. shares though CREST/electronic shares do not have standing
Baltic partners
shareholders brought a claim in unfair prejudice regarding a loan made to company. Claim are not limited to interest as members/shareholders
Re R. A. Nobel & son 1983
court applied test: would an ordinary reasonably bystander consider companies conduct as unfairly prejudicial? Director was excluded from meetings (prejudicial) but reason for exclusion was his conduct (thus not unfair). To be successful must show it is both prejudicial and unfair
Booth & Others
Business declared would not pay dividends anymore but was paying large excess sums to directors. Held this was unfairly prejudicial
Brayhead
no expressed authority and role did not allow authority, but conduct of board by allowing him to enter into contracts without prior authority gave implied actual authority.
Royal British Bank v Turquand 1856
limits on value directors can authorise without shareholder approval. Approved loan. Liquidator argued should be unsecured as was no proper authorisation. Indoor management rule: do not need to check all internal processes followed. 3rd party does not need to ensure agent fulfilling constitutional obligations and acting within their powers.
Buckhurst Park
managing director entered into contract wasn’t authorised too. Held: appointment as managing director gave representation of authority thus ostensible authority.
