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however, repealed by the Companies Act 1928.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.