Held
that even where shares are of same class, if certain members have special
rights not attached to their shares then s125 may still apply.
that even where shares are of same class, if certain members have special
rights not attached to their shares then s125 may still apply.
Two
Companies published rival local newspapers.
Companies published rival local newspapers.
Only
one was viable, so agreed company A would publish paper, but would issue 10% of
its ordinary share capital to company B.
one was viable, so agreed company A would publish paper, but would issue 10% of
its ordinary share capital to company B.
B
anxious to ensure paper remained locally controlled –
anxious to ensure paper remained locally controlled –
Hence
A’s articles amended to give B various powers including pre-emptive rights on
share issues and disposals.
A’s articles amended to give B various powers including pre-emptive rights on
share issues and disposals.
These
rights not attached to particular shares but on company B by name [ie shares
were not unique class].
rights not attached to particular shares but on company B by name [ie shares
were not unique class].
18
years later, A’s directors proposed to pass special resolution deleting
relevant articles.
years later, A’s directors proposed to pass special resolution deleting
relevant articles.
B
applied to court arguing its rights were class rights that could not be
abrogated without its consent.
applied to court arguing its rights were class rights that could not be
abrogated without its consent.
Scott
J stated there were three cats of special rights in articles:
J stated there were three cats of special rights in articles:
- Rights annexed to particular
shares. - Where articles purport to confer
rights on individuals not in their capacity as members or shareholders. - Rights that, though not attached to
particular shares, are nonetheless conferred on beneficiary in their capacity
as member or shareholder.
s125,
he believed, applied to cats 1. and 3.
he believed, applied to cats 1. and 3.
Rights
conferred on B fell into cat 3.
conferred on B fell into cat 3.
Therefore
found in their favour.
found in their favour.
