Companies, Courts and Management
| Date | 01 September 1983 |
| Published date | 01 September 1983 |
| DOI | http://doi.org/10.1111/j.1468-2230.1983.tb02540.x |
Sept.
19831
NOTES
OF
CASES
643
has been a prevalent characteristic of legislative changes in labour law
since
1979.
It
may well be, that like
N.W.L.,
MacShane,
Sirs
and
Hadmor40
before,
Cheall
will come to be seen as a landmark of judicial
refusal to take the law beyond recognised limits, confident in the
knowledge that the Government needs little or no persuasion to initiate
the changes necessary
to
further the interests which the unsuccessful
litigant represents.
BOB
SIMPSON"
COMPANIES, COURTS
AND
MANAGEMENT
THE
shareholder has the right to see that the company observes the
memorandum and articles
of
association and also to ensure that the
other shareholders observe those provisions; but if, beyond that, the law
is to confer
''
further rights on a shareholder, the scope and consequences
of
such further rights require careful consideration." The legislature
has now given the shareholder the right
to
such remedy as the court
thinks fit where he proves that an actual
or
proposed act or omission of
the company (including an act or omission on its behalf) is or would be
"
unfairly prejudicial
"
to the interests of some part of the members
(including at least himself): Companies Act
1980,
s.
75.
But little
consideration has been given to the problem really posed by this
section.
The case of
Re
A
Company
was never likely in itself to elucidate the
problems. Executors petitioned under section
75;
they held shares in
the family company for the testator's children which were the only
assets available for their maintenance. The directors offered
El
12,000
for the shares; the executors considered that
on
an
open market valu-
ation they would be worth E175,000. Moreover, the directors refused
to have the company purchase the shares or to implement a recon-
~truction.~ The executors further objected to a proposed diversification
into
a
new business (a wine bar) which, they alleged, would dissipate
the company's only liquid resources. Was this a case
of
"
unfair
prejudice
"
within section
75?
If they had fallen within the section, these facts would have opened
a new era in our company law. But it was held-surely correctly-that
the rights of the executors as potential vendors
of
the shares had not
been infringed by the directors' failure
to
propound a scheme for
reconstruction or to arrange a purchase by the company. Nor was the
consideration by the directors of the plan
to
diversify into the wine
bar anything other than part of the execution of their duty
"
to manage
46
See note
43,
supra.
*
Lecturer in Law, London School
of
Economics.
Prudential Assurance
Co.
Ltd.
v.
Newman Industries
Ltd.
(No.
2) (19821 Ch. 204, 224
[I9831
2
W.L.R.
381
(Lord Grantchester, Q.C.).
Under, respectively,
ss.
46 and 47, Companies Act
1981,
and
s.
287, Companies
Act
(C.A.).
1948.
To continue reading
Request your trial