''Scottish Co-operative Wholesale Society Ltd v Meyer''

959 Year 959 ( CMLIX) was a common year starting on Saturday (link will display the full calendar) of the Julian calendar. Events By place Byzantine Empire * April - May – The Byzantines refuse to pay the yearly tribute. A Hungari ...

AC 324 is a

UK company law The United Kingdom company law regulates corporations formed under the Companies Act 2006. Also governed by the Insolvency Act 1986, the UK Corporate Governance Code, European Union Directives and court cases, the company is the primary legal ...

case, concerning the predecessor of the

unfair prejudice Unfair prejudice in United Kingdom, company law is a statutory form of action that may be brought by aggrieved shareholders against their company. Under the Companies Act 2006 the relevant provision is s 994, the identical successor to s 459 Compa ...

provision, an action for "oppression" under section 210 of the

Companies Act 1948 The Companies Act 1948 (11 & 12 Geo.6 c.38) was an Act of the Parliament of the United Kingdom, which regulated UK company law. Its descendant is the Companies Act 2006. Cases decided under this Act *''Bushell v Faith'' 970AC 1099 *''Scottish ...

(now section 994 of the

Companies Act 2006 The Companies Act 2006 (c 46) is an Act of the Parliament of the United Kingdom which forms the primary source of UK company law. The Act was brought into force in stages, with the final provision being commenced on 1 October 2009. It largely ...

). The judgement remains a leading precedent for the clear statement that the duty of care of a director is to the company itself, and not to the interests of particular shareholders. It also illustrates the reluctance of English law to "admit the reality of interrelated companies acting in any way other than as a number of separate entities tied together by their relationship as significant shareholders in each other."Dine, 32, and passim

Facts

The Scottish Co-operative Wholesale Society Ltd. set up a new company called "Scottish Textile & Manufacturing Co Ltd" with Dr Meyer and Mr Lucas. They manufactured

rayon Rayon is a semi-synthetic fiber, made from natural sources of regenerated cellulose, such as wood and related agricultural products. It has the same molecular structure as cellulose. It is also called viscose. Many types and grades of viscose f ...

cloth. Back then, one required state licensing and to get a license experienced managers were needed. Dr Meyer and Mr Lucas were the managing directors, with some shares, while the Scottish Co-op held the majority of the company's shares and appointed the other three directors to the board. These three were also directors of the Scottish Co-op itself. In 1952, the licensing system was ended by the government. So Scottish Co-op used its majority of votes to transfer all the business to a branch of the Co-op. It also cut off the supplies of raw materials. The company could not continue, no profits were made and the share value crashed. Mr Meyer and Mr Lucas felt oppressed and petitioned for relief under section 210 of the

. Lord Denning said,

Judgment

The House of Lords held that the conduct of the majority was indeed oppressive, and ordered that Dr Meyer and Mr Lucas' shares be bought at a price that was fair. Lord Denning's speech continued.

Notes

References

*Dine, Janet and Koutsias, Marios, ''Corporate Law'', 6th edn, Palgrave Macmillan, London, 2008, {{English law types United Kingdom company case law 1959 in British law Lord Denning cases House of Lords cases 1959 in case law Co-operatives in Scotland

Facts

Judgment

See also

Notes

References