ICAS TC Business Law Module 15 Flashcards
Greenhalgh v Arderne Cinemas 1951
Facts: The company had two classes of ordinary shares of 10p and 50p. Each share
carried one vote. The company passed a resolution to sub-divide the 50p shares into
five 10p shares.
Held: There had been no variation of class rights, as each of the original 10p shares carried one vote, as before.
White v Bristol Aeroplane Co Ltd 1953
Facts: Only the ordinary shareholders in this company were entitled to participate in
any bonus issue of shares. The company made a bonus issue of new ordinary and
new preference shares to the existing ordinary shareholders. The existing preference
shareholders objected, arguing that the issue of new preference shares reduced their
proportionate holding of preference shares and that this amounted to a variation of
their rights to which they had not agreed.
Held: Although the issue of additional preference shares altered the balance of the
voting power of the existing preference shares it did not affect their rights. They still
had the same number of shares (and votes at a class meeting) as before. Hence,
the company’s proposals did not need the approval of the existing preference
shareholders.
Re Bede Shipping Co Ltd 1917
Held: such a power only justifies a refusal to register on grounds that are personal to
the proposed transferee.
Re Hackney Pavilion Ltd 1924
Facts: The two directors were divided on the question of whether the proposed
transfer should proceed. The company secretary was asked to write to the executrix’s
solicitors and return the transfer documents indicating that the transfer could not go
ahead.
Held: The transfer must go ahead since at the board meeting, the board was equally
divided and could not exercise its right to decline.
Curtis v JJ Curtis & Co Ltd 1986
Facts: The company’s articles provided that a shareholder who wished to transfer
his shares to an outsider had first of all to offer them to existing shareholders. This
was not done.
Held: A perpetual injunction was granted against the transferor preventing him from
transferring them other than in accordance with the articles.
Ooregum Gold Mining Co of India v Roper 1892
Facts: The company had issued ordinary shares for adequate consideration but the
market value of those issued shares was much less than their nominal value. No one
would subscribe for more ordinary shares offered at par. However, the company
needed more money so it decided in general meeting to issue £1 preference shares
credited as 75 pence paid with the result that allottees would obtain £1 shares for
only 25 pence. A shareholder challenged the issue.
Held: the purpose of attaching nominal value to shares was to render every
shareholder liable to pay that amount for the shares (giving credit for any amount
already paid). The company could not by agreement commit itself to take less. The
full £1 share had to be paid.
Re Eddystone Marine Insurance Co 1893
Facts: Before offering shares to the public, E allotted 6,000 £1 shares as fully paid
to allottees as a reward for the services given in the formation of the company. In
reality, no such services had been given. When the company later went into
liquidation, the liquidator argued that £6,000 was due on the shares as no
consideration had been given.
Held: The liquidator’s claim was upheld.
Flitcroft’s Case 1882
Facts: The directors had presented to the shareholders in general meeting reports
and balance sheets in which various debts the directors knew were bad were entered
as assets, so that an apparent profit was shown in the company’s accounts, although
in reality there were no profits. The general meeting relied on the accounts to pass
resolutions to declare dividends. The company was wound up and the liquidator
sought to have the directors make good the wrongful payment of dividends.
Held: The directors were liable for wrongful payments and must reimburse the
company the full amount of the dividend.
