Peterson J said: ‘[D]irectors are not entitled to use their powers of issuing shares merely for the purpose of maintaining their control or the control of themselves and their friends over the affairs of the company, or merely for the purpose of defeating the wishes of the existing majority of shareholders. That is, however, exactly what has happened in the present case. With the merits of the dispute as between the directors and the plaintiff I have no concern whatever. The plaintiff and his friends held a majority of the shares of the company, and they were entitled, so long as that majority remained, to have their views prevail in accordance with the regulations of the company; and it was not, in my opinion, open to the directors, for the purpose of converting a minority into a majority, and solely for the purpose of defeating the wishes of the existing majority, to issue the shares which are in dispute in the present action.’
Judges:
Peterson J
Citations:
[1920] 1 Ch 77
Jurisdiction:
England and Wales
Cited by:
Cited – Hogg v Cramphorn Limited ChD 1966
An honest belief that directors should seek to maintain their office for the good of the company did not prevent the motive for issuing additional shares to prevent a take-over from being an improper motive. The directors’ powers to issue shares . .
Lists of cited by and citing cases may be incomplete.
Company
Updated: 11 April 2022; Ref: scu.472245
