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The company’s articles granted it a lien over partly paid shares. The articles were amended to extend the lien to cover fully paid-up shares.
An alteration to the articles will only be valid if it is bona fide for the benefit of the company as a whole.
A company initiated legal proceedings against one of its directors. The director sought to rely on a provision of the articles, which stated that disputes would first be referred to arbitration.
A member seeking to enforce the constitution must be acting in his capacity as a member. Constitution provisions that do not relate to membership rights will not normally form part of the statutory contract.
The company’s solicitor attempted to enforce a provision in the company’s articles in order to prevent his removal.
Outsiders are not party to the statutory contract created by the constitution and so cannot enforce its provisions.
The company’s managing director and majority shareholder sought to alter the articles to remove the members’ pre-emption rights, and allow them to sell shares to an outsider, without first offering them to existing members.
The phrase ‘the company as a whole’ refers to the shareholders as a body. The court should ask whether or not the alteration was for the benefit of a hypothetical member.
A member initiated legal proceedings against the company, even though the company’s articles stated that disputes would first be referred to arbitration.
The constitution forms a contract between the company and its members. Accordingly, the company could enforce the constitution and the legal proceedings were stayed.
The articles limited the voting power of members who held a large amount of shares. These members transferred their shares to nominees in order to circumvent the limitation. The company’s chairman rejected the nominees’ votes.
The shares were validly transferred. Therefore, the company had no right to reject the nominees’ votes. The nominee members were therefore permitted to enforce the constitution against the company.
The articles provided that if a member wished to sell his shares, the directors would purchase them. The directors refused to purchase a member’s shares.
The constitution forms a contract between the members themselves, which can be enforced by a member, providing that the provision breached concerns a membership right. In quasi-partnership companies, rights conferred upon the directors will likely be regarded as membership rights.
The company wished to alter its articles in order to remove a director who had engaged in financial irregularities.
The test imposed in Allen was primarily subjective, although an alteration would not be valid if no reasonable man could consider it to be for the benefit of the company.