A and company B were majority shareholders in company M.
A and company H made competing takeover bids for company M.
of company M favoured company H’s bid, but Companies A and B would not accept
of company M then issued new shares to company H.
that their primary purpose in doing so was to raise new capital, and other
purpose was to reduce control of Companies A and B so that company H’s bid
Council held [Australian case] primary purpose of issue was in fact to reduce shareholding
of Companies A and B.
unconstitutional for directors to use their power to allot shares for primary
purpose of destroying an existing majority or creating a new majority.
approach to take in these cases:
to ascertain its limits.
permissible purposes for which power given.
If this actual purpose is a proper one, it will not be
tainted by presence of some other improper, but insubstantial, purpose.