Criterion sought to set aside a shareholders agreement. Their partner had said they were concerned that another party was taking Criterion over and that this would put at risk their working relationships. The agreement sought to add a poison pill to prevent such a takeover. It was asserted that the agreement constituted dishonest assistance by the defendant in entering into an agreement in excess of the board’s powers.
Held: There was a triable issue that the put option created was in excess of the power of the board. However, the agreement was ‘motivated not by a desire to advance or protect the commercial interests of Criterion but from a desire contingently to cripple those interests so as to deter an unwanted predator. ‘ and so was unenforceable.
The Hon Mr Justice Hart
[2002] EWHC 496 (Ch)
Bailii
Limited Partnership Act 1907
England and Wales
Citing:
Appealed to – Criterion Properties Plc v Stratford UK Properties Llc and others ChD 27-Mar-2002
Criterion sought to set aside a shareholders agreement. Their partner had said they were concerned that another party was taking Criterion over and that this would put at risk their working relationships. The agreement sought to add a poison pill to . .
Cited – Savoy Corp Ltd v Development Underwriting Ltd 1963
(Australia) The court discussed the extent of the director’s powers to arrange the company to prevent a take over: ‘It would seem to me to be unreal in the light of the structure of modern companies and of modern business life to take the view that . .
Cited – Mills v Mills 1938
(High Court of Australia) Where the main purpose of the directors’ resolution (in this case to increase the share base) is to benefit the company it matters not that it incidentally also benefits a director.
Dixon J pointed out the difficulties . .
Cited – Howard Smith Limited v Ampol Petroleum Limited PC 14-Feb-1974
(New South Wales) The court considered the use by directors of their fiduciary power of allotment of shares for a different purpose than that for which it was granted, and so as to dilute the voting power of the majority shareholding of issued . .
Cited – Teck Corporation Ltd v Millar 1972
The court discussed the validity of steps which might be taken by a company director to resist a take-over. Berger J said: ‘So how wide a latitude ought the directors to have? If a group is seeking to obtain control, must the directors ignore them? . .
Cited – Belmont Finance Corporation Ltd v Williams Furniture Ltd (No 2) 1980
It had been alleged that there had been a conspiracy involving the company giving unlawful financial assistance for the purchase of its own shares.
Held: Dishonesty is not a necessary ingredient of liability in an allegation of a ‘knowing . .
Cited – Rolled Steel Products (Holdings) Ltd v British Steel Corporation and Others CA 1986
The plaintiff company had guaranteed borrowings, using powers within the memorandum of association, but for purposes which were held to be improper, because they were not in the interests of the plaintiff company itself. One issue was whether the . .
Cited – Bank of Credit and Commerce International (Overseas) Ltd and Another v Akindele CA 22-Jun-2000
The test of whether a person who received funds held them on constructive trust, was not whether he himself was dishonest, but rather whether he had knowledge of circumstances which made it unconscionable to hold on to the money received. In respect . .
Cited – Bank of Credit and Commerce International (Overseas) Ltd and Another v Akindele ChD 1999
Chief Akindele agreed in 1985 with ICIC Overseas to invest US$10m in the purchase of 250,000 shares of BCCI Holdings, and to hold the shares for two years. If he wanted to sell the shares after the expiry of two years and up to five years from the . .
Cited – In re Montagu’s Settlement Trusts 1987
In the context of knowing receipt, a categorisation of knowledge is used to determine whether a person is bound by notice.
Sir Robert Megarry V-C said: ‘The cold calculus of constructive and imputed notice does not seem to me to be an . .
Cited – Eagle Trust Plc v SBC Securities Ltd; Same v Sbci Bank Corporation Investment Banking Ltd ChD 28-Sep-1994
A financial adviser was not liable in negligence for the allegedly negligent selection of sub-underwriters. On the issue of knowing receipt in a claim for restitution, ‘What the decision in Belmont (No 2) . . shows most clearly is that in a . .
Cited by:
Appeal from – Criterion Properties Plc v Stratford UK Properties and others CA 18-Dec-2002
The parties came together in a limited partnership to develop property. The appeal was against a refusal to grant summary judgment on a claim that one party had been induced to enter the contract by a fraudulent misrepresentation.
Held: In . .
Appealed to – Criterion Properties Plc v Stratford UK Properties Llc and others ChD 27-Mar-2002
Criterion sought to set aside a shareholders agreement. Their partner had said they were concerned that another party was taking Criterion over and that this would put at risk their working relationships. The agreement sought to add a poison pill to . .
Lists of cited by and citing cases may be incomplete.
Updated: 04 August 2021; Ref: scu.170060
