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House of Fraser v AGCE Investments Ltd

[1987] AC 387 (HL)

Case summary last updated at 23/01/2020 15:24 by the Oxbridge Notes in-house law team.

Judgement for the case House of Fraser v AGCE Investments Ltd

D made a reduction in capital; repaid the non-participating preference shareholders first. Was provision in articles for class consent to be required wherever class rights where ‘affected’; moreover D claimed that reduction had caused variation in class rights. Held:
 
·       Is no variation of rights
Ø  paying off preference shares entitled to priority on a winding-up is giving effect to rights attached to those shares
Ø  moreover by having priority upon a return of capital, non-participating preference shareholders must be taken to have agreed to allow their entitlement to be extinguished first
·       Moreover rights attaching to shares were not ‘affected’
Ø  words ‘affect’ contemplate that there is some right remaining after transaction in question
Ø  whereas here, C’s rights were completely extinguished

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