Re BSB Holdings Ltd (No 2): ChD 1996

Arden J considered a submission that there could be no breach of duty by the directors unless the substantial purpose of their acts was to discriminate improperly against a group of shareholders. In rejecting that submission she commented as follows:- ‘The difficulty with this analysis is that directors could commit a breach of duty if they exercised a power for the purpose of discriminating against a group of shareholders but not if they failed to consider the interests of that group of shareholders at all. Moreover, where the proposed act under consideration has different effects on different groups of shareholders in a company, it is difficult to apply the test that what is done must be done in the interests of the members generally, who are the company for this purpose (see Greenhalgh v Arderne Cinemas Ltd [1951] Ch 286; Parke v The Daily News Ltd [1962] Ch 927 at 963). The duty as formulated by Goulding J more accurately records what must be done to strike the right balance between conflicting sections of interest. It is in my judgment an accurate statement of the duty to which directors are subject in that situation. The duty is stated in very general terms; its content cannot be exhaustively defined but must depend on the facts of a particular case.’
and ‘However, in my judgment, it is not the effect of Re Saul D Harrison and Sons plc that a remedy under s 459 can be given only if the directors have acted in breach of duty or if the company has breached the terms of its articles or some other relevant agreement. These matters constitute in most cases the basis for deciding what conduct is unfair. But the words of the section are wide and general and, save where the circumstances are governed by the judgments in Re Saul D Harrison and Sons plc, the categories of unfair prejudice are not closed. The standards of corporate behaviour recognised through s 459 may in an appropriate case thus not be limited to those imposed by enactment or existing case law.’


Arden J


[1996] 1 BCLC 155


England and Wales


See AlsoRe BSB Holdings Ltd; London Merchant Securities Plc v Chargeurs Sa and Others ChD 2-Aug-1995
Protection of minority shareholders was not to be used to impede the proper management of a company’s affairs. Directors must act in the company’s overall best interests despite prejudice to one class of shareholders.
Arden J said: ‘However, in . .

Cited by:

CitedKohli v Lit and Others ChD 13-Nov-2009
The claimant asserted that the other shareholders had acted in a manner unfairly prejudicial to her within the company.
Held: The claimant was allowed to bring in without prejudice correspondence to contradict evidence by the defendant which . .
Lists of cited by and citing cases may be incomplete.


Updated: 27 June 2022; Ref: scu.378390