Director of company wanted to sell shares to a third party. Company’s articles provided for right of pre-emption for existing members. Director successfully got special resolution passed removing this right of pre-emption from articles. C, a member of company, challenged this. Held:
Lord Evershed MR
· Bona fide for benefit of company as a whole means shareholder must do what, in his honest opinion, is for benefit of company as a whole.
· However if there is discrimination towards minority shareholders, resolution will be invalid.
· ‘Company as a whole’ does not mean company as a distinct entity.
Ø But rather shareholders as a body.
Contradiction – Evershed proposes subjective test, but later states that if there is discrimination (an objective concept), resolution is invalid.
