Valuation of Shares on Order for Purchase
The Co-operative Society had formed a 51 per cent-owned subsidiary to manufacture rayon at a time of strict post-war controls. The other shares were owned by two outside directors with skill and experience in the trade. When these directors declined to sell their shares to the society it began switching its business to a new department within its own organisation. The subsidiary’s business declined and its shares fell heavily in value. On the directors’ petition the Court of Session had ordered the society to buy the directors’ shares at ‘what would have been the value of the shares at the commencement of the proceedings had it not been for the oppressive conduct of which complaint was made’.
Held: The House dismissed the Society’s appeal. The grant of relief was in the judge’s discretion. Viscount Simonds, Lord Keith and Lord Denning all specifically approved a valuation which was both back-dated to the presentation of the petition and adjusted to compensate for the past oppression.
An oppressing shareholder was directed to purchase the shares of the oppressed shareholder: (Lord Denning) ‘One of the most useful orders mentioned in the section — which will enable the Court to do justice to the injured shareholders — is to order the oppressor to buy their shares at a fair price: and a fair price would be, I think, the value which the shares would have had at the date of the petition, if there had been no oppression. Once the oppressor has bought the shares, the company can survive. It can continue to operate. That is a matter for him. It is, no doubt, true that an order of this kind gives to the oppressed shareholders what is in effect money compensation for the injury done to them: but I see no objection to this. The section gives a large discretion to the Court and it is well exercised in making the oppressor make compensation to those who have suffered at his hands.’
Viscount Simonds, Lord Keith and Lord Denning
[1958] 3 All ER 66, [1959] 3 WLR 404, [1959] AC 324
Companies Act 1948 210
Scotland
Cited by:
Applied – Coleman Taymar Ltd and Others v Oakes and Another ChD 19-Jul-2001
A company director owed a fiduciary duty to his company, but that could not, of itself, prevent him making arrangements to set up in competition once his employment by the company came to an end, save only for acts during the period of his . .
Cited – Foskett v McKeown and Others HL 18-May-2000
A property developer using monies which he held on trust to carry out a development instead had mixed those monies with his own in his bank account, and subsequently used those mixed monies to pay premiums on a life assurance policy on his own life, . .
Cited – Bonham v Crow and others CA 13-Dec-2001
The petitioner complained of unfair prejudice in the way the company had been operated, and sought an order that his shares be bought out. However the judge found that the net value of the company was negative and the shares worthless. The judge had . .
Lists of cited by and citing cases may be incomplete.
Updated: 25 July 2021; Ref: scu.181230 br>