''Mutual Life Insurance Co. of New York v The Rank Organisation Ltd.''

985 Year 985 ( CMLXXXV) was a common year starting on Thursday (link will display the full calendar) of the Julian calendar. Events By place Europe * Summer – Henry II (the Wrangler) is restored as duke of Bavaria by Empress Theoph ...

BCLC 11 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 dealing with "oppression" (or

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 ...

) under section 20

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 s.994

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 ...

). Goulding J delivered the first instance judgment.

Facts

United States and Canadian securities law requires registration of companies for share issues. In 1975

Rank Organisation The Rank Organisation was a British entertainment conglomerate founded by industrialist J. Arthur Rank in April 1937. It quickly became the largest and most vertically integrated film company in the United Kingdom, owning production, distribu ...

Ltd, an entertainment company, decided to offer 20 million ordinary shares to the public, with a preference to existing Rank shareholders. This preference offer did not however extended to shareholders based in the United States and Canada (including Mutual Life), because it was thought not to be in the company's interest to have to register there. Rank's articles of association stated that directors could allot, deal with or dispose of company shares "on such terms as they think proper". But the American and Canadian shareholders (they owned shares "beneficially" through nominee companies, who were defendants alongside Rank in the case) were still unhappy. They said they had been discriminated against, and that was a "breach of contract" because s.20 of the Companies Act 1948 implied shareholders deserved equal treatment (this is the "oppression" provision; see now, s 994

Judgment

Goulding J dismissed the shareholders' complaint. He held that section 20 did not create a term of the corporate contract that shareholders were to be treated equally in respect of a board resolution (or for that matter a resolution of shareholders in general meeting). The duties of the directors were to exercise their powers to issue shares in good faith, ''bona fide'' in the interests of the company and exercise them fairly between shareholders (not necessarily treat shareholders identically). That is what the directors had done. The treatment of the American and Canadian shareholders was not unfair, because their shareholdings and rights had not been affected. Rank shareholders had no right to expect their share interest remain in constant proportion to the others' in the company forever. The

counsel A counsel or a counsellor at law is a person who gives advice and deals with various issues, particularly in legal matters. It is a title often used interchangeably with the title of ''lawyer''. The word ''counsel'' can also mean advice given ...

for the petitioners had suggested that a "discriminatory" allotment should only be decided on where no other option were available, but this was clearly going too far to constrain business decisions. Goulding J review all the authorities and summarised (at 24,

BCLC 11),

Notes

{{UK law United Kingdom company case law 1985 in British law English good faith case law 1985 in case law