Was proposed alteration to articles giving company power to buy out shareholders compulsorily.C, a minority member, sued on grounds that alteration was invalid. Held:
· ‘In expropriation cases, test from Allen is “inappropriate”
· Test should be whether alteration of articles is “beyond any purpose contemplated by articles or oppressive (as that term is understood in company law)”
o And alteration will be for proper purpose where:
i) Company is at risk of “significant detriment or harm”; and
ii) Act of expropriation is a reasonable means of alleviating that harm
· Where this not case, resolution unlawful:
Ø even if minority is being compensated for their shares
Ø even if those in favour bona fide believe it is in best interests of company
Ø oreven if alteration is actually for benefit of company!
· Burden to show alteration is valid is on the majority.
· This test better reflects the proprietary nature of a share.
· Company gained tax advantages from buy out of C’s shares, and C himself would be better off if he were expropriated than if he were to remain a member of company.
· Despite this, alteration invalid.