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Hello sir could u pls explain to me in a simple way this case law. I find it hard to understand.
Sidebottom V Kershaw, Leese & Co
Facts: The company altered its articles to empower the directors to require any member who carried on a business competing with that of the company, to sell his shares at a fair price to persons nominated by the directors. The minority against whom the new article was aimed did carry on a competing business and they challenged the validity of the alteration on the ground that if was an abuse of majority power to ‘expel’ a member.
Held: The Court of Appeal held that the evidence showed that the claimant might cause the defendant company loss by information which he received as a member, and as the power was restricted to expulsion for competing, the alteration was for the benefit of the company as a whole and was valid.
What is hard to understand? Where (one hundred years ago) a member of a company was carrying on a competing business, it was believed that that was unfair because, as a member, that competitor would have inside knowledge about the company’s activities and thus would cause the company harm by using that inside knowledge to benefit his own competing company
What is there to understand?
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