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Hogg v Cramphorn

[1967] Ch 254

Case summary last updated at 22/01/2020 15:59 by the Oxbridge Notes in-house law team.

Judgement for the case Hogg v Cramphorn

Directors issued around 6,000 shares for purpose of defeating a takeover of company; claimed to be doing this in best interests of employees and shareholders of company. This succeeded, but directors were sued by company for breach of duty. Held:
 
·       Test for improper purposes is objective
Ø  i.e. fact that directors though they were acting in best interests of employees/shareholders is irrelevant
·       Primary purpose of power to allot shares is raising of capital.
·       Thus use of power to block a takeover is breach of duty.

Hogg v Cramphorn crops up in following areas of law