Company releasing new shares

Question 1

S994 Companies Act

Answer 1

Unfair Prejudice - S994 Companies Act protects members of companies against conduct that is ‘unfairly prejudicial to the interests of its members generally, or some part of its members.’

Question 2

Re Noble Ltd 1983, Re London School of Electronics Ltd

Answer 2

In Re Noble Ltd. [1983] the Court said someone would be covered by this if the value of their shareholding was diminished or put at risk by those in control of the company, in a way which is unfair. Also tested in Re London School of Electronics Ltd

Question 3

Re Cumana Ltd 1986

Answer 3

In Re Cumana Ltd.[1986], the court held that using your majority shareholding to issue more shares as a rights issue knowing that the other shareholder could not afford to take up was unfair prejudice. But, it had to have been solely done to increase the percentage shareholding and not to raise money. Sharon must show that Simon knew that she couldn’t afford the shares and that it wasn’t just to raise cash for the company.