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Hello sir could u pls explain this case law about altering the article. I find it hard to understand.
Sidebottom v Kershaw, Leese & Co (1920)
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 it 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 needs explanation? The rationale behind the Court of Appeal’s decision is fully explained.
Maybe what you are missing is that this case was from 95 years ago and things have moved along a lot since then.
The principle that it illustrates is still sound – any alteration of the company’s constitution must be for the benefit of the company as a whole. That still holds good as a principle in 2015 (and very nearly 2016!)
Is that enough or do you want more?
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