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Howard Smith v Ampol Petroleum [1974] UKPC 3

By Oxbridge Law TeamUpdated 04/01/2024 07:05

Judgement for the case Howard Smith v Ampol Petroleum

Table Of Contents

  • Company was subject to rival takeover bids from two of its shareholders.

  • One bidder had 55% of shares, but was clear that the other offer was better for company. Thus directors of company allotted $10 million of new shares to preferred bidder to give him majority.

Held

  • Power is exercised properly where “substantial purpose” for which power was exercised is proper.

    • 'Substantial purpose’: i.e. the dominant or primary purpose

  • On facts, issue of shares was entirely to dilute power of majority shareholder.

  • Thus was breach of duty.

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