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:
· 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.