Secretarial practice

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Monograph

Identifikator:: 1828236004

URN:: urn:nbn:de:zbw-retromon-249926

Document type:: Monograph

Title:: Secretarial practice

Edition:: fourth edition

Place of publication:: Cambridge

Publisher:: W. Heffer & Sons Ltd

Year of publication:: 1930

Scope:: viii, 987 Seiten

Digitisation:: 2022

Collection:: Economics Books

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Document type:: Monograph

Structure type:: Chapter

Title:: Chapter IV. Articles of association

Collection:: Economics Books

ARTICLES OF ASSOCIATION 29 It has been pointed out above that alterations of the articles purporting to enlarge the powers of a company, or to deprive the members of a statutory right, are invalid. There is another limitation on the power of alteration of articles. Bearing in mind that any alteration of articles involves the binding of a minority by a majority, it must not be forgotten that the power must be exercised bond fide for the benefit of the company as a whole, and no fraud on, or oppression of, the minority, or want of good faith on the part of the majority, will be permitted. A fictitious case, put by Lord Wrenbury, in his well-known book, well illustrates this. ‘Say,’ he says, ‘that there are one thousand shares of £10 each ranking equally for dividend, a special resolution that shares 1 to goo shall for the future have twice as much dividend as shares goI to 1000 must be impossible as against shares gor to 1000.” "It is obvious that it is theoretically possible for the statutory majority of shareholders to pass such a resolution, but it is equally clear that any Court would restrain the company from acting upon the resolution, inasmuch as it would result in grossly unfair and oppressive treatment of a helpless minority. Such a resolution would not be passed bond fide for the benefit of the company as a whole. In Brown v. British Abrasive Wheel Co. (1919, I Ch. 290) a proposed alteration was restrained by the Court as oppressive to the minority; in Sidebottom v. Kershaw Leese & Co. (1920, 1 Ch. 254) an alteration introducing the principle of compulsory transfer, in the case of a shareholder competing with the company, was held to be made bond fide and was permitted. In Dafen Tinplate Co. v. Llanelly Steel Co. (1920, 2 Ch. 124) an alteration introducing a general power to buy out any member, with one specified exception, at pleasure, was held invalid, as not being genuinely for the benefit of the company as a whole; but see Shuttleworth v Cox Bros. & Co. (Maidenhead) (1927, 2 K.B. g, supra). A statutory restriction on the power of a company to alter its articles was imposed by the Companies (Foreign Interests) Act, 1917, s. 1 of which in effect prohibited the alteration of any article, or regulation, designed to limit the interest of, or power of control by, aliens, without the written consent of the Board of Trade. This Act was. however, repealed by the Companies Act 1928. A secretary should always make careful note of matters in which the articles of his company appear to be defective; and the opportunity should be taken, when meetings of the company are required for other purposes, to improve the articles and bring them up-to-date.

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