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Brown v British Abrasive Wheel Co 1 Ch 290 is a UK company law case, concerning the validity of an alteration to a company's constitution, which adversely affect the interests of one of the shareholders.
Facts
British Abrasive Wheel Co needed to raise further capital. The 98% majority were willing to provide this capital if they could buy up the 2% minority. Having failed to effect this buying agreement, the 98% purposed to change the articles of association to give them the power to purchase the shares of the minority. The proposed article provided for the compulsory purchase of the minority's shares on certain terms. However, the majority were prepared to insert a provision regarding price which stated that the minority would get a price which the court thought was fair.
Judgment
Astbury J held that the alteration was not for the benefit of the company as a whole and could not be made. One reason for this was that there was no direct link between the provision of the extra capital and the alteration of the articles. Although the whole scheme had been to provide the capital after removing the dissenting shareholders, it would in fact have been possible to remove the shareholders and then refuse to provide the capital. this case underpins the principle that resources of a company
must be to the benefit of shareholders a s a whole and not be detrimental to the minority shareholders.
See also
| Minority protection cases | |
|---|---|
| Companies Act 2006 ss 260-264 | |
| Foss v Harbottle (1843) 67 ER 189 | |
| Southern Foundries (1926) Ltd v Shirlaw AC 701 | |
| Edwards v Halliwell 2 All ER 1064 | |
| Greenhalgh v Arderne Cinemas Ltd Ch 286 | |
| Wallersteiner v Moir (No 2) QB 373 | |
| Estmanco v Greater London Council 1 WLR 2 | |
| Smith v Croft (No 2) Ch 114 | |
| Johnson v Gore Wood & Co | |
| Profinance Trust SA v Gladstone | |
| Companies Act 2006 ss 994-996 | |
| Re Yenidje Tobacco Co Ltd 2 Ch 426 | |
| Ebrahimi v Westbourne Galleries Ltd AC 360 | |
| Re Bird Precision Bellows Ltd Ch 658 | |
| Insolvency Act 1986 s 122(1)(g) | |
| Re London School of Electronics Ch 211 | |
| O’Neill v Phillips | |
| see UK company law |
| Company constitution cases | |
|---|---|
| Attorney General v Davy (1741) 2 Atk 212 | |
| R v Richardson (1758) 97 ER 426 | |
| Pender v Lushington (1877) 6 Ch D 70 | |
| Automatic Self-Clean. Filter Ltd v Cuninghame 2 Ch 34 | |
| Quin & Axtens Ltd v Salmon AC 442 | |
| Barron v Potter 1 Ch 895 | |
| Hickman v Kent Sheep-Breeders’ Association 1 Ch 881 | |
| Southern Foundries (1926) Ltd v Shirlaw AC 701 | |
| Harold Holdsworth Ltd v Caddies 1 WLR 352 | |
| Bushell v Faith AC 1099 | |
| Attorney General of Belize v Belize Telecom Ltd | |
| Companies Act 2006 s 33 | |
| see UK company law |
- UK company law
- Allen v Gold Reefs of West Africa Ltd 1 Ch 656
- Sidebottom v Kershaw, Leese & Co Ltd 1 Ch 154
- Dafen Tinplate Co Ltd v Llanelly Steel Co (1907) Ltd 2 Ch 124
- Shuttleworth v Cox Bros and Co (Maidenhead) 1 Ch 154
- Southern Foundries (1926) Ltd v Shirlaw AC 701
- Greenhalgh v Arderne Cinemas Ltd Ch 286
Notes
- "Brown v British Abrasive Wheel Co [1919] 1 ch 290". Oxbridge Notes. 21 January 2020. Retrieved 20 April 2024.