Keeping promises Flashcards
(4 cards)
S994 CA - Re Noble Ltd 1983
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.’ 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.
S996(1)
The question is whether breaching this promise would be unfair. If it went to court then, then S996 (1) says the court can ‘make such order as it thinks fit’ to put the situation right. Often this is asking the majority shareholder to buy out the minority. It has to be assumed that Bob is the majority shareholder or Grizzelda could appoint herself m.d.
O’Neill v Phillips 1999
In O’Neill v Phillips [1999] Lord Hoffman said what was required was breach of the articles or shareholders agreement: `a member of a company will not ordinarily be able to complain of unfairness unless there is a breach of the terms on which he agreed the affairs of the company should be conducted.’
Promise broken
This can also occur where a promise is broken and a shareholders role or influence in management of the company is affected. Unfair prejudice can be cited for a broken promise.
