Re Smith & Fawcett Ltd
| Re Smith and Fawcett Ltd. | |
|---|---|
 | |
| Court | Court of Appeal of England and Wales |
| Citation(s) | [1942] Ch 304 |
| Keywords | |
| Interests of the company | |
Re Smith and Fawcett Ltd. [1942] Ch 304 is a UK company law case, concerning the meaning of "the interests of the company". It is relevant for the Companies Act 2006 section 172.
Facts
Article 10 of the company's constitution said that directors could refuse to register share transfers. Mr. Fawcett, one of the two directors and shareholders, had died. Mr. Smith co-opted another director and refused to register a transfer of shares to the late Mr. Fawcett’s executors. Half the shares were bought, and the other half offered to the executors.
Judgment
Lord Greene MR held that in absence of mala fides, this was proper. Private companies are ‘much more analogous to partnerships than to public companies’. Listed companies may not have such restrictions at all.
| “ | The principles to be applied in cases where the articles of a company confer a discretion on directors … are, for the present purposes, free from doubt. They must exercise their discretion bona fide in what they consider - not what a court may consider - is in the interests of the company, and not for any collateral purpose. | ” |
See also
- UK company law
- Business judgment rule
- Australian Securities and Investments Commission v Rich [2009] NSWSC 1229
Notes
References
External links
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