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Shuttleworth v Cox Bros and Co (Maidenhead)
From Wikipedia, the free encyclopedia
(Shuttleworth v Cox Bros and Co (Maidenhead) [1927] 1 Ch 154 is a UK company law case,
concerning alteration of a company's constitution
Contents
= 2 Judgment
= 3 Bona Fide Intentions Test
= 4 See also
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Facts
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.
Judgment
‘The Court of Appeal dismissed the appeal holding that the alteration of the articles was bona fide for
the benefit of the company and was valid. It reaffirmed the bona fide test laid down in Sidebottom v
Kershaw, Leese & Co
Bankes L.J.:
"So the test is whether the alteration of the articles was in the opinion of the shareholders for the benefit
of the company. 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, 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. Or, if the facts should raise the
question, the Court may be able to apply another test - namely, whether or not the action of the
shareholders is capable of being considered for the benefit of the company. I cannot agree with what
seems to have been the view of Peterson J. in Dafen Tinplate Co. v. Llanelly Steel Co, 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. In the present case it seems to me impossible to say that the action of
these defendants was either incapable of being for the benefit of the company or such that no
reasonable men could consider it for the benefit of the company. It is idle to say that their action
was directed against the plaintiff, because the more outrageous the conduct of a director the more
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