Shuttleworth v Cox Bros and Co (Maidenhead) [1927] 1 Ch 154 is a UK company law case, concerning alteration of a company's constitution.
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Cox Bros and Co (Maidenhead) had appointed a board of directors for life, and had fixed this under its articles of association. Then it proposed to amend its articles so that a director would lose his position if the other directors requested in writing for him to resign. Mr Shuttleworth, who was targeted by the changes, brought a claim alleging that the alteration of the articles was not bona fide for the benefit of the company as a whole.
The Court of Appeal held that the shareholders, in changing the constitution to target Mr Shuttleworth were acting irrationally, and the change would be invalid. Scrutton LJ said that the shareholders must act honestly having regard to and endeavouring to act for the benefit of the company. Bankes LJ held,[1]
| “ | By what criterion is the Court to ascertain the opinion of the shareholders upon this question? The alteration may be so oppressive as to cast suspicion on the honesty of the persons responsible for it, or so extravagant that no reasonable men could really consider it for the benefit of the company. In such cases the Court is, I think, entitled to treat the conduct of shareholders as it does the verdict of a jury, and to say that the alteration of a company's articles shall not stand if it is such that no reasonable men could consider it for the benefit of the company... I cannot agree with what seems to have been the view of Peterson J in Dafen Tinplate Co Ltd v Llanelly Steel Co [1920] 2 Ch 124 ... that whenever the Court and the shareholders may differ in opinion upon what is for the benefit of the company, the view of the Court must prevail. | ” |