article gave existing members pre-emptive rights if another member wished to
sell his shares.
had arranged to sell an outsider some shares and wanted to give effect to this agreement.
therefore procured passing of special resolution negativing pre-emptive rights
of existing members.
member, G, claimed resolutions were fraud on minority, had not been passed bona
fide in interests of company as whole, and were therefore invalid.
of Appeal disagreed.
were not fraud on minority.
bona fide question, Evershed MR –
that ‘bona fide for the benefit of the company as a whole’ meant not two things
[ie (i) bona fide, and (ii) for the interests of the company as a whole] but
one thing –
must proceed on what, in his honest opinion, is for benefit of company as a
as a whole’ does not mean company as a commercial entity, distinct from
corporators as general body.
case may be taken of individual hypothetical member and it may be asked whether
what is proposed is, in honest opinion of those who voted in its favour, for
that person’s benefit.