Exam Q Case Law

Front 1

Fulham Football Club (1987) v Richards and another

Back 1

a. Differentstakeholders might have different needs. Sections 172 of CA 2006 - Companyis more than a summary of its members. ·

- Fulham had petitioned the courtcomplaining that the chairman had broken the rules and acted improperly inconnection with the purchase of a player by Tottenham.

Front 2

§ Oneilv Phillips

Back 2

· Ifyou fall out with directors you can't expect hem to save you. · MrP did not fullfill his promise to grant a bigger share of the company and henceOneil sued for not fullfilling the promises.

Front 3

(1) Foss v Harbottle (1843) 2 Hare 461

Back 3

he plaintiffs (nowadays called claimants) were shareholders in a companycalled ‘The Victoria Park Co’ which was formed to buy land for use as apleasure park. The defendants were the other directors and shareholders in thecompany. The plaintiffs alleged that the defendants had sold land belonging tothem to the company at an exorbitant price. The plaintiffs asked the court toorder that the defendants make good the losses to the company. The court ruledthat the action could not proceed as the individual shareholders were not theproper plaintiffs. If a wrong had been committed, the wrong had been committedagainst the company and therefore the company is the proper plaintiff.

Front 4

(18) Ebrahimi v Westbourne Galleries Ltd [1973] 2 WLR 1289(HL)

Back 4

Ebrahimi and Nazar had carried on a carpet business for several years inpartnership. They then formed a limited company carrying on the same businessand were appointed its directors and became equal shareholders. Shortlyafterwards, Nazar’s son was made a third director, and both existing directorstransferred shares to him. Nazar and his son then had the majority at generalmeetings. The company was profitable. Ebrahimi was removed as a director by theother two, who would not buy his shares from him. He then petitioned on theground of oppressive conduct that they should buy his shares from him, oralternatively that the company should be wound up. Held: the case failed on theground of oppressive conduct, as there was no evidence of this; but a windingup order was granted on the basis that this was a quasi partnership and therelationship had broken down.

Front 5

(27)Re Blue Arrow plc [1987] BCLC 585

Back 5

This was one of the rare s459cases involving a listed public company. The petitioner had been removed fromoffice as permanent president, and alleged unfairly prejudicial conduct. Thecourt held that in a public company there was no room for arguments based on alegitimate expectation that the company would be run on understandingsdifferent from the articles of association. This was because outside investorsare entitled to assume that the company will be conducted in accordance withits articles. The court accordingly refused to grant a remedy.Vinelott J: ‘Outsideinvestors were entitled to assume that the whole of the constitution wascontained in the articles, read, of course, together with the Companies Acts.There is in these circumstances no room for any legitimate expectation foundedon some agreement or arrangement made between the directors and kept up theirsleeves and not disclosed to those placing the shares with the public throughthe Unlisted Securities Market.’ (nowadaysthe Alternative Investment Market).

Front 6

Fergusonv Wilson (1866) LR 2 Ch 77

Back 6

[the directors] are merely agents of thecompany.’ 'The company cannot act in its own person, it can only act throughdirectors.'

Front 7

Bushell v Faith [1970] AC 1099(HL).

Back 7

Procedure: This is done under 168-169 CA 2006, and demands an ordinary resolutionon special notice (S312). A director who is removed may be entitled to claimcompensation for loss of office. Directors have rights of representation.

Three directors each held 100 shares in a company withan issued share capital of 300 shares. A provision of the articles stated that,in the event of a resolution being proposed for the removal of a director fromoffice, that director’s shares would carry three votes per share. Two of thedirectors attempted to remove the third but could not obtain the necessarymajority because of the weighted voting rights. A declaration was sought fromthe court that the resolution had been carried. Held that s.303 did not preventcompanies attaching special voting rights to shares. The resolution was notvalid.