Was proposed alteration to articles giving company power to buy out shareholders compulsorily.
Claimant, a minority member, sued on grounds that alteration was invalid.
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)”
And alteration will be for proper purpose where:
Company is at risk of “significant detriment or harm”; and
Act of expropriation is a reasonable means of alleviating that harm
Where this not case, resolution unlawful:
Even if minority is being compensated for their shares
Even if those in favour bona fide believe it is in best interests of company
or even 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 Claimant’s shares, and Claimant himself would be better off if he were expropriated than if he were to remain a member of company.
Despite this, alteration invalid.
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