Brown V British Abrasive Wheel Co

''Brown v British Abrasive Wheel Co'' 9191 Ch 290 is a UK company law case, concerning the validity of an alteration to a company's constitution, which adversely affect the interests of one of the shareholders.

Facts

British Abrasive Wheel Co needed to raise further capital. The 98% majority were willing to provide this capital if they could buy up the 2% minority. Having failed to effect this buying agreement, the 98% purposed to change the articles of association to give them the power to purchase the shares of the minority. The proposed article provided for the compulsory purchase of the minority's shares on certain terms. However, the majority were prepared to insert a provision regarding price which stated that the minority would get a price which the court thought was fair.

Judgment

Astbury J held that the alteration was not for the benefit of the company as a whole and could not be made. One reason for this was that there was no direct link between the provision of the extra capital and the alteration of the articles. Although the whole scheme had been to provide the capital after removing the dissenting shareholders, it would in fact have been possible to remove the shareholders and then refuse to provide the capital.

See also

*UK company law
*'' Allen v Gold Reefs of West Africa Ltd'' 9001 Ch 656
*''Sidebottom v Kershaw, Leese & Co Ltd'' 9201 Ch 154
*'' Dafen Tinplate Co Ltd v Llanelly Steel Co'' (1907) Ltd 9202 Ch 124
*''Shuttleworth v Cox Bros and Co (Maidenhead)'' 9271 Ch 154
*''Southern Foundries (1926) Ltd v Shirlaw'' 940AC 701
*''Greenhalgh v Arderne Cinemas Ltd'' 951Ch 286

Notes

{{DEFAULTSORT:Brown V British Abrasive Wheel Co
1919 in case law
United Kingdom company case law
1919 in British law