Company issues shares to defeat a takeover

Shareholders have to vote in favour or against accepting an offer from another company to buy the shares of their company. Where the directors believe that the shareholders will vote in favour of the takeover and the directors don't want the takeover to go ahead, they could issue extra shares to their friends. Then, when the vote takes place, the directors and their friends will vote against and defeat all those votes cast in favour Ok?

Does this not count as 'rigging' the vote? I am assuming not as it must be legal. Are there any restrictions on who the shares can be sold to? Presumably if there were other major decisions that were due to be made affecting the company they could do the same thing to gain the majority vote. Does the rule of is it in the best interests of the company as a whole apply (as per changes in articles)? Otherwise the situation can continue to be manipulated.

No, you're correct, it IS rigging the vote and that's why now there are laws to protect against it happening Read the cases Bamford v Bamford and Hogg v Cramphorn

Oh I don't remember coming across these laws. Can we be examined on them? I haven't gone over the shares part of the syllabus again yet (in case I missed this) I will read them tomorrow, I have flexed my hours at work so I am starting earlier in the mornings so should try and get an early night. Thanks for pointing me in the right direction though!

You're welcome