In 2015, Sharon and Theresa, two friends from university, formed Winos Ltd. Sharon
owns 75% of the shares, and Theresa owns 25%. Sharon, and Sharon’s brother
Ulrich, are the company’s only directors. It was agreed that Theresa would be a
‘sleeping investor’, and would not participate in the running of the company.
However, Theresa has regularly attended board meetings. The company’s
constitution includes Regulation 55, which provides that ‘neither shareholder may
sell their shares without first offering to sell them to the other shareholder’.
A month ago, Sharon was approached by Predator Plc, a competitor of Winos.
Predator offered to buy Sharon’s shares from her, at a very attractive price. Sharon
wants to sell to Predator without offering to sell her shares to Theresa first. Sharon
and Ulrich have called a shareholders’ meeting to alter the articles by removing
Regulation 55, but Theresa says she will not attend.
Predator has said that if it succeeds in buying Sharon’s shares, it plans to prevent
Theresa from attending any more board meetings, and will also ensure that Winos
will not pay any dividends for the foreseeable future.
Advise Theresa:
(a) whether she can effectively prevent Sharon from altering the articles, either by
refusing to attend the shareholders’ meeting or by arguing that the alteration will
harm Winos; and
(b) whether, assuming that Sharon can lawfully alter the articles and sell her shares
to Predator, she (Theresa) can bring proceedings under section 994 of the
Companies Act 2006 to force Predator to purchase her shares and, if so, how the
price of her shares would be determined.
In order to advise theresa that whether she will be successful in altering the
company article in order tp prevent sharon from selling his shares, by not attending
the meeting which sharon called regarding removing to regulation 55. Secondly we
will access in our question can she bring proceeding under 994 and remedy under
996 will also be discussed.
It has been stated under statutory contract s 33 that members of the company can
alter there article by passing a special resolution under company act 2006 , the
decision can be made in a informal meeting but that decision must be backed by all
the other shareholders (re duomatic).
The prerogative to later the article has been stated in the case of allen v gold ref
And this allen test can be considered successful even if minority shareholder claims
that the test was not passed in a manner which will be considered beneficial for the
company (bona fied)
Later on courts stated that the alteration wont be supported if its judges opinion
tthat alteration the article was in bona fied manner rather the objective perspective
must be followed , which will access that will a reasonable shareholder will believe
that this amendment was happening in bona fied manner then it will be passed but if
majorinty oppose it then the alteration will be striked down by courts.
owns 75% of the shares, and Theresa owns 25%. Sharon, and Sharon’s brother
Ulrich, are the company’s only directors. It was agreed that Theresa would be a
‘sleeping investor’, and would not participate in the running of the company.
However, Theresa has regularly attended board meetings. The company’s
constitution includes Regulation 55, which provides that ‘neither shareholder may
sell their shares without first offering to sell them to the other shareholder’.
A month ago, Sharon was approached by Predator Plc, a competitor of Winos.
Predator offered to buy Sharon’s shares from her, at a very attractive price. Sharon
wants to sell to Predator without offering to sell her shares to Theresa first. Sharon
and Ulrich have called a shareholders’ meeting to alter the articles by removing
Regulation 55, but Theresa says she will not attend.
Predator has said that if it succeeds in buying Sharon’s shares, it plans to prevent
Theresa from attending any more board meetings, and will also ensure that Winos
will not pay any dividends for the foreseeable future.
Advise Theresa:
(a) whether she can effectively prevent Sharon from altering the articles, either by
refusing to attend the shareholders’ meeting or by arguing that the alteration will
harm Winos; and
(b) whether, assuming that Sharon can lawfully alter the articles and sell her shares
to Predator, she (Theresa) can bring proceedings under section 994 of the
Companies Act 2006 to force Predator to purchase her shares and, if so, how the
price of her shares would be determined.
In order to advise theresa that whether she will be successful in altering the
company article in order tp prevent sharon from selling his shares, by not attending
the meeting which sharon called regarding removing to regulation 55. Secondly we
will access in our question can she bring proceeding under 994 and remedy under
996 will also be discussed.
It has been stated under statutory contract s 33 that members of the company can
alter there article by passing a special resolution under company act 2006 , the
decision can be made in a informal meeting but that decision must be backed by all
the other shareholders (re duomatic).
The prerogative to later the article has been stated in the case of allen v gold ref
And this allen test can be considered successful even if minority shareholder claims
that the test was not passed in a manner which will be considered beneficial for the
company (bona fied)
Later on courts stated that the alteration wont be supported if its judges opinion
tthat alteration the article was in bona fied manner rather the objective perspective
must be followed , which will access that will a reasonable shareholder will believe
that this amendment was happening in bona fied manner then it will be passed but if
majorinty oppose it then the alteration will be striked down by courts.
