[Case decided under Companies Act 1948, s210]
Can conduct of affairs of parent company as majority shareholder
in subsidiary constitute conduct of affairs of subsidiary?:
Two petitioners were minority shareholders and
directors of subsidiary company.
Parent company was majority shareholder of subsidiary and
appointed further three nominee directors to subsidiary.
These three directors were also directors of parent company.
When parent company no longer needed subsidiary for
purposes of its own business, it deliberately ran down subsid’s business and
started similar business itself.
Only offered supplies to subsidiary at excessive
The three directors knew of policy but did not pass information
to petitioners and did nothing to stop it.
Shares in subsidiary became worthless.
House of Lords held parent company had acted towards
petitioners in oppressive manner by subordinating interests of subsidiary to
those of parent and that this conduct amounted to conduct in affairs of subsidiary.
Fact directors had not actively done anything oppressive to minority was irrelevant –
Affairs of company can be conducted oppressively by
directors doing nothing to protect its interests when they ought to do something.