Howard Smith v Ampol Petroleum [1974] UKPC 3
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
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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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