Facts
Mr Greenhalgh was a minority shareholder in Arderne Cinemas and was in a protracted battle to prevent majority shareholder, Mr Mallard selling control. The company had two classes of shares; one class was worth ten shilling a share and the other class worth two shilling a share. The ten shillings were divided into two shilling shares, and all carried one vote. Mr Greenhalgh had the previous two shilling shares, and lost control of the company.
The articles of association provided by cl. 10 (a): "No shares in the company shall be transferred to a person not a member of the company so long as a member of the company may be willing to purchase such shares at a fair value to be ascertained in accordance with sub-clause (b) hereof".
The company changed its articles by special resolution in general meeting allowing existing shareholders to offer any shares to person/members outside the company. Mr Mallard, the majority shareholder, wished to transfer his shares for 6 shillings each to Mr Sol Sheckman in return for £5000 and his resignation from the board.
Mr Greenhalgh wished to prevent control of the company going away, and argued that the article change was invalid, a fraud on him and the other minority shareholders, and asked for compensation.
Read more about this topic: Greenhalgh V Arderne Cinemas Ltd
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