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Citco Banking Corporation v Pusser’s Ltd

[2007] UKPC 13

Case summary last updated at 21/01/2020 16:05 by the Oxbridge Notes in-house law team.

Judgement for the case Citco Banking Corporation v Pusser’s Ltd

Was a special resolution to amend articles so as to create a category of class B shares, which had 50 votes per share (as opposed to class A shares, which had one vote each). Additional special resolution was passed so as to convert shares of chairman of company into class B shares; this was to ensure that chairman of company remained in absolute control of company. C challenged on basis that resolutions had not been passed bona fide in best interests of company, but simply to benefit chairman. Held:
Lord Hoffmann
·        Nature of test is subjective.
·        For valid challenge to resolution, shareholders must have acted in way that impugns their:
i)         Conscience (dishonesty); or
ii)       Sanity (irrationality)
·       Court should avoid analysis of actual commercial benefits to company of alteration.
·       Test operates the same regardless of whether alteration is advantageous to shareholders or disadvantageous.
·       Gambottohas no support in English authority.
·       If those voting in favour of the special resolutions genuinely though alteration was for benefit of company as a whole, resolutions are valid.
·       As they appeared to, alterations are valid.

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