Company needed urgent capital. Shareholders, holding 98% of shares, were willing to put money up on condition that they could buy out remaining 2% of shareholders. Majority proposed special resolution adding provision to articles to effect that any shareholder was bound to transfer his shares upon request from the holders of over 90% of shares. C, part of 2%, challenged it. Held:
· Majority had acted in good faith when proposing the resolution.
· However provision was not for benefit of company as a whole.
Ø But simply for benefit of majority.
· Thereforealteration of articles was invalid.
· Very objective test. Notwithstanding majority’s good faith, were held not to be acting in interests of company.