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Well I have a few doubts regarding articles alteration and rights of memebers and the company.
Firstly in the Allen v Gold Reefs of West Africa case, although the company exercised the right of lien does the shareholder/memeber still possess full rights and powers in regards to his shares? That is assuming Allen was a major shareholder, he could under the lien request a resolution to re-amend the articles allowing himself to repossess his shares and assuming he is a major shareholder, he might have the ability (power) to amend the articles. Also if that is possible and did happen would the court overrule Allen’s request if the company files a case against him as Allen’s request would not allow the company to retain its assets (amount owing to it). However again this re-amendment by Allen would allow future memebers to easily trade in their shares.
Which brings me to my second question in the case of Dafen Tinplate v Llanelly Steel. I am not really sure about the exact details of the case and how dividends were ditributed, that is were profits accumulated and shared by an agreed proportion or each shareholder distributed their own dividends out of their profits. Anyway since Dafen was dealing outside the business would’nt that increase it’s own profits and lower the company’s overall profits, meaning more benefit for itself than the “company as a whole”. Or is it that minority buy out always overrules other aspects? Also is minority memeber buy out considered as a case of quasi-partnership (case of lifting the veil) or is that only when it comes to directors?
Finally, If a company fails to send copies to the registrar within 15 days does that make the resolution invalid? And if the company fails to notify particular memebers of the meeting and the resolution in time or at all would that also make the resolution invalid or do the concerned memebers have certain rights in that matter?
If, as you propose, Allen had a majority, then it would have been difficult for the company to achieve a 75% majority to change the constitution – unless of course, Allen voted for the change! Even if he were ( only ) a 25+% shareholder, he could have blocked the resolution.
If he were a ( say ) 16% shareholder, the rest would have needed to vote >48% in favour to defeat him.
As for changing the constitution back, that too is unlikely. If for no other reason, as you point out, it would make debt collection that little bit more difficult
I don’t know the basis of the Llanelli Steel dividend policy. It would make sense ( at least to me! ) if the dividends were distributed based on amount of business put through the company. However, dividends are by nature distributed according to shareholdings, so that suggestion of mine is not likely!
Not sure that I can follow your logic about “more benefit for itself ….” but compulsory purchase of minority shares is pretty much always an anathema for the Courts. there are exceptions – Sidebottom case and Shuttleworth case – but it goes against the spirit of fairness to allow the “big boys” to bully the small ones
If a company fails to file amended constitution within 15 days? so far as I am aware, the amendments are not valid and cannot be relied upon by the company in its future activities
Thank you for replying and your work on opentuition in general.
Actually part of my confusion regarding Dafen Tinplate was because of the Sidebottom’s case. Because as I read in part of the facts on Dafen Tinplate “The new article was not restricted to acquisition of shares on specific grounds where benefit to the company would result. It was simplt expressed as a power to acquire shares of a memeber. The claimant objected that the alteration was invalid since it was not for the benefit of the company.”
Anyway it seems a little confusing when it comes to minority expulsion as to the circimstances as to when it is considered “fair”.
Regarding benefiting itself I meant if Dafen Tinplate would have taken its business to Llenelly Steele Co (instead of outside/other business) would’nt that have increased business and therefore profits for the company as a whole and hence increased shareholder’s value. And this begs the question should have the alteration specifically mentioned this point (that Dafen’s conduct as a shareholder is taking business to competitors for example instead of its own group) would the alteration been valid then?
Anyway I just wanted to thank you for your reply.
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