Percival v Wright
| Percival v Wright | |
|---|---|
 | |
| Court | High Court of Justice |
| Citation(s) | [1902] 2 Ch 401 |
| Keywords | |
| Duty of care | |
Percival v Wright [1902] 2 Ch 401 is a UK company law case concerning directors' duties, holding that directors only owe duties of loyalty to the company, and not to individual shareholders. This is now codified in CA 2006 section 170.
Facts
Mr Wright was the chairman of a company, who with two other directors, agreed to buy shares from Mr Percival at £12.50 each. Mr Percival then found out the directors had been negotiating with another person for the sale of the whole company at far more than £12.50 a share. The directors had not told Percival. Percival claimed breach of fiduciary duty.
Judgment
Swinfen Eady J held the directors owed duties to the company and not shareholders individually.
| “ | It was strenuously urged that, though incorporation affected the relations of the shareholders to the external world, the company thereby becoming a distinct entity, the position of the shareholders inter se was not affected, and was the same as that of partners or shareholders in an unincorporated company. I am unable to adopt that view...
There is no question of unfair dealing in this case. The directors did not approach the shareholders with the view of obtaining their shares. The shareholders approached the directors, and named the price at which they were desirous of selling. The plaintiffs’ case wholly fails, and must be dismissed with costs. |
” |
See also
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- UK company law
Notes
If there are different class of shareholders, it has to be fair between classes.