The court considered the propriety of a payment made by a charitable company to a director for her loss of office. The charity was to transfer a substantial sum to a new charity headed by the departing director.
Held: The court approved the proposed transaction and ordered the remaining director to cast his decisive vote in favour of the transaction. In the ‘unique circumstances’ of this ‘extremely unusual’ case, the Grant was in the best interests of CIFF. The principal reasons given by the Chancellor were that the parties should not be allowed to renege on the deal they had made in good faith, that Ms Cooper would be contributing a further $40m to her new charity and that approving the Grant would bring finality and avoid further legal costs. He referred to the considerable talents of Ms Cooper. The Chancellor expressly stated that, while he had come to a clear conclusion that he should approve the Grant, he was ‘not saying that no reasonable trustee or fiduciary could disagree with [his] view’ that the Grant was in the best interests of CIFF or that ‘anyone who disagreed with [his] view would automatically be acting in bad faith’
Section 217 of the 2006 Act applies as much to charitable companies as it does to ordinary trading companies.
Sir Geoffrey Vos Ch
[2017] EWHC 1379 (Ch), [2017] WLR(D) 390, [2018] 1 BCLC 677, [2018] 2 WLR 259, [2018] Ch 371, [2018] 2 All ER 504
Bailii, WLRD
Companies Act 2006 215 217
England and Wales
Citing:
Cited – In re The French Protestant Hospital ChD 1951
The charity was an incorporated body created by a Royal Charter granted in 1718. The governor and directors sought to exercise a power conferred on them by the charter to amend the byelaws to enable the directors’ professional firms to be . .
Cited – Von Ernst and Cie SA v Inland Revenue Commissioners CA 1979
The assets of a corporate charity were held on charitable trusts: ‘We were referred to certain authorities which give support to the view that a company incorporated for exclusively charitable purposes is in the position of a trustee of its funds or . .
Cited – Liverpool and District Hospital for Diseases of the Heart v Attorney-General ChD 1981
Charitable Company is Trustee of Assets
The court was asked as to the distribution of surplus assets of a charitable company which was in winding up, and the question whether or not s 257 et seq. Companies Act 1948 applied, including s 265 which made provision for the distribution of . .
Cited – Pender v Lushington CA 1877
After stating that the Court would not restrain the exercise of certain votes by members of a company merely because the holder of the votes had a motive for voting them which the Court might not approve, his Lordship said: ‘I am confirmed in that . .
Cited – The North-West Transportation Company and James Hughes Beatty v Henry Beatty and Others PC 21-Jul-1887
(Canada) . .
Cited – Allan v Gold Reefs of West Africa Ltd CA 19-Feb-1900
The company had altered its articles so as to give itself a lien on paid up shares in respect of the failure of the shareholder to pay calls on other shares which had not been fully paid up. The effect of the amendment was to alter the contractual . .
Cited – Arbuthnott v Bonnyman and Others CA 20-May-2015
Appeal from refusal of unfair prejudice petition.
After listing cases: ‘I would extract from them the following principles:
(1) The limitations on the exercise of the power to amend a company’s articles arise because, as in the case of . .
Cited – Northern Counties Securities Ltd v Jackson and Steeple Ltd ChD 1974
Walton J reiterated that, when a shareholder is voting for or against a particular resolution, he is voting as a person owing no fiduciary duty to the company and who is exercising his own right of property to vote as he thinks fit. . .
Cited by:
Appeal from – Lehtimaki v The Children’s Investment Fund Foundation (UK) and Others CA 6-Jul-2018
A charity established by H and W wanted to transfer part of its fund to a new charity headed by W in return for her resignation from the first charity on the breakdown of the marriage. Court approval was sought for a transfer, but the remaining . .
At First Instance – Lehtimaki and Others v Cooper SC 29-Jul-2020
Charitable Company- Directors’ Status and Duties
A married couple set up a charitable foundation to assist children in developing countries. When the marriage failed an attempt was made to establish a second foundation with funds from the first, as part of W leaving the Trust. Court approval was . .
Lists of cited by and citing cases may be incomplete.
Updated: 25 August 2021; Ref: scu.588022