(Estmanco (Kilner House) Ltd. v. GLC). Is the alteration intra vires to the Memorandum of the Company? As an exception to Foss v. Harbottle "fraud" is There have been cases where an alteration of the articles of company amounts to a breach of contract between the contract between company and third party. Any alteration of Articles so made shall be valid as if originally contained in the articles. Is the alteration intra vires to the Companies Act, 2013? Court also observed that alteration will not be valid if it has been made for the benefit of an aggressive, vindictive, or fraudulent majority. All the Best for Exam. Posted by 9 Ch. Conversion of Private Limited Company into Public Limited Company involves alteration of article of association of Private Company under Section 14 which cannot be done without passing special resolution of shareholders in the General Meeting. In Allen v. Gold Reefs of West Africa (1900) I Ch 656 case, the Court held that alteration of articles with retrospective effect is valid provided it was bonafide and for the benefit of the company as a whole. The Articles can be altered in the following ways –. 9 Ch.App. The cases in which the minority can maintain such an action [to redress a wrong done to the company] are therefore confined to those in which the acts complained of are of a fraudulent character or beyond the powers of the company." 14. MENIER v. HOOPER’S TELEGRAPH WORKS (1874) L.R. Otuguor Ogamioba and Ors V Oghene and Ors. There are certain restrictions on the nature and extent of alterations that can be made in the articles. Contains Case Laws of Amit Bhaskar; with Facts/Contentions and Principle/Ratio. A familiar example is where the majority are endeavouring directly or indirectly to appropriate to themselves money, property, or advantages which belong to the company, or in which the other shareholders are entitled to participate, as was alleged in the case of Menier v. Hooper’s Telegraph Works [9 Ch. That is an instance of another case which went to trial and where it was not even attempted to shut out the plaintiffs by proceedings in the nature of a demurrer. 33 Mad.36 case, it was held that a company may alter its articles even if it causes breach of contract with the outsider. British Murac Rubber Syndicate Ltd. v. Alperton Rubber Co. Ltd. Hari Chandana Joga Deva v. Hindustan Co-operative Insurance Society Ltd. By amending or substituting any specific rule. The main issue here on fraud is about misappropriation of corporate assets. POSTS AND TELECOMMUNICATIONS CORP. v. M/S TER... PARLETT v. GUPPYS (BRIDPORT) LTD AND OTHERS, SHAMSHUDIN MOHAMED v. EAST AFRICAN COMMUNITY. Such alteration involves addition of any restrictions and limitations required to be inserted in the articles of a private company. BRITISH AND AMERICAN TRUSTEE AND FINANCE CORPORATI... SMITH NEW COURT SECURITIES LTD v. CITIBANK NA AND ... WURZEL V. HOUGHTON MAIN HOME DELIVERY SERVICE LTD.... E.A. S sued the company for wrongful repudiation of the contract. case raise two questions of law and one of mixed law and fact before an ... G Menier Telegraph Works (1874) L.R v. Hooper's. ROLLED STEEL PRODUCTS v. BRITISH STEEL CORPORATION, BAGESHWARI CHARAN SINGH v. JAGARNATH KUARI. In Allen v.Gold Reefs of West Africa (1900) I Ch 656 case, the Court held that alteration of articles with retrospective effect is valid provided it was bonafide and for the benefit of the company as a whole. 792. Is the alteration bonafide and for the benefit of the company as a whole? Hogg, Constitutional Law of Canada, 2nd ed. Hooper’s then found they could make a greater profit by selling the cable to another company, but this company did not have the government concession to lay the … v. Harris 186 case, the Court held that if a contract involves as one of its terms that an Article is not to be altered, then the Company is not at liberty to alter that Article so as to break that contract and thus a Company cannot alter its Articles to break a contract. In Menier v. Hooper’s Telegraph Works Ltd., (1874) 9 C App. D 705 case, the Court held that the power to alter articles cannot be taken away by any provision in the memorandum or articles”. 154 case, the Court held that alteration in articles should not sanction anything which is illegal or against public policy. 350, Lord Justice Mellish at p. 354 says : Cases NOT involving amendment of the cos constitution - Taking the cos property: Menier v Hooper’s Telegraph Works - Majority unwilling to sue when they are the alleged wrongdoers: Biala v Mallina HoldingsLtd . Alteration seeking to impose additional liability on a member of the company after the date on which he became a member, to take shares more than what he has already taken or to pay any money than what he is liable to pay on his share shall not be binding upon him unless he agrees in writing to such an alteration except in the case where the company is a club or any other association and the alteration provides for an increase in the rate of subscription by the members. In Sidebottom v. Dershaw, Leese & Co. (1920) 1 Ch. 350. 350 case, a company was formed to lay down a transatlantic telegraph cable which was to be made by Hooper’s Telegraph Works Ltd. at pp. Daniels V Daniels, Alexander V Automatic Telephone Co, Melifonwu V Egbuj. Pass the resolution under Section 173 (1) of the Companies Act, 2013, and also pass for arrangements to call an extraordinary general meeting (Section 101 of the Act) with the decision of its date, time, and venue for passing the alteration in articles by resolution with a special majority. App. PONDICHERRY RAILWAY CO. LTD v. COMMISSIONER OF INC... RE NEW BRITISH IRON COMPANY EX PARTE BECKWITH. Rajahmundry Electric Supply Corp. v. A. Nageshwar Rao, 1956 AIR SC 213.. ICICI v. Parasrampuria Synthetic Ltd., Suit Appeal No. 350. It ceases to be public company and becomes public company from the date of the approval of the Tribunal. 350 and .  (Pavlides v. Jensen  2 All ER 518)  (Menier v. Hooper's Telegraph Works  LR 9 CH APP 350), (Cook v. Deeks  1 AC 544). belong to the company they repre~ent";~~ and dicta in Pavlides v. Jen~en,~O "(directors appropriating assets of the c~mpany)".~~ With respect, Templeman, J. RE GREAT NORTHERN SALT AND CHEMICAL WORKS CO. The alteration in Article must be bonafide and for the benefit of the company as a whole. Mason. The company must follow each and every step of the procedure as explained and mentioned in the Act failing which, the company shall be punishable with a hefty penalty. Convene a Board meeting under Section 173 (1) of the Companies Act, 2013 by giving Notice of at least 7 days. Then in Menier v. Hooper's Telegraph Works (1874) L. R. 9 Ch. In British Murac Rubber Syndicate Ltd. v. Alperton Rubber Co. Ltd.(1915) 2 Ch. Where the company is defrauded (i) Misappropriation of corporate property ... - Like 'Menier v Hooper's Telegraph Works' He was a director of Duke Holding Ltd and an employee of the Duke Group. any alteration relating to the appointment or reappointment of a managing or whole time director or a director not liable to retire by rotation in the case of a public company or private company which is a subsidiary of a public company, and. Mr Goldblatt started with the proposition that "a majority of shareholders cannot put company assets into their own pockets to the exclusion of the minority", for which he cited Menier v Hooper's Telegraph Works (1874) LR 9 Ch 350. 4 As in Menier v. Hooper's Telegraph Works (1874) 9 Ch.App. It has the statutory power to do so. ASPRO LTD v. COMMISSIONER OF TAXES, NEW ZEALAND, BRITISH SUGAR MANUFACTURERS LTD v. HARRIS. any alteration which has the effect of converting a public company into a private company. It was held that dismissal was a breach of contract and therefore the company was liable to pay damages to the plaintiff. It would have been otherwise had the acts complained of been of an ultra vires or actually fraudulent character, as had been explained by James and Mellish, L. D 705 case, the Court held that the power to alter articles cannot be taken away by any provision in the memorandum or articles”. 79-80 (emphasis supplied). The company has to take care of restriction imposed on the alteration of the Articles. 's analysis of these cases indicates a distortion of the concept of "fraud on the minority" as recognized in this area of the law. 690 case, the Court held that a company cannot break its contract by altering its articles, but, when dealing with contracts referring to revocable Articles, and especially with contracts between a member of the company and the company respecting his shares, care must be taken not to assume that the contract involves as one of its terms in Article which is not to be altered. The plaintiffs below being citizens and residents of New York, and the Southern Pacific, a Kentucky corporation, it removed the case to the District Court of the United States for the Eastern District of New York; and that court, after a hearing on the evidence, entered a decree for the plaintiffs. Otuguor Ogamioba and Ors V Oghene and Ors. Burland v Earle  AC 83 Cooks v Deeks  1 AC 554 Menier v Hooper’s Telegraph Works (1874) 9 Ch App 350: where majority votes itself the right to divide the assets among themselves. See also Menier V Hooper’s Telegraph Works. In Southern Foundaries Ltd. V. Shirlaw, (1940) A.C. 701 case, S was appointed Managing Director in a company for ten years by an agreement. NATIONAL RIVERS AUTHORITY v. ALFRED MCALPINE HOMES... ORIENTAL INLAND STEAM NAVIGATION CO., EX PARTE SCI... RUDEWA ESTATES LTD v. STAMP DUTIES COMMISSIONER. Where the contract with the outsider is wholly dependent on articles, the alteration would be operative, and, accordingly, the person accepting appointment purely on the terms of the articles takes the risk of those terms being altered, and will be bound by the altered articles. It cannot be set right by application to Court. In Hari Chandana Joga Deva v. Hindustan Co-operative Insurance Society Ltd. AIR 1925 Cal. Make changes in all the copies of the Articles. 350.. (1967) 65 DLR 501.. Dhakeswari Cotton Mills v. 350]. Menier v Hooper’s Ts Telegraph Works Ltd  9 Ch App 350 Case facts: The European and South American Telegraph Co was formed to lay a transatlantic cable to be made by Hooper’s, who was the majority shareholder in E & SA Telegraph. In Walker v. London Tramways Co. (1879) 12 Ch. 9 CH. Hodgson V National and Local Government Officials Association. In this case, where Menier a minority shareholder complained that there were self-interested transactions between a majority member and the company, the court held that a minority shareholder’s action was properly bought in these circumstances. In Walker v. London Tramways Co. (1879) 12 Ch. See Daniels V Daniels: Frank and Ors V Abdu: Prudential Assurance Co Ltd V Newman Industries (No.2). Menier v Hooper's Telegraph Works (1874) an example of misappropriation of corporate assets. 9 Ch.App. TAKING THE COMPANY’s PROPERTY - Majority members NOT allowed to vote to IMPROPERLY TAKE company property - MENIER v HOOPERS TELEGRAPH WORKS - Majority must NOT exercise their vote to give THEMSELVES ‘property, advantages or rights belonging to the company’ – breaches equitable limitation NGURLI LTD v MCCANN In Menier v. Hoopers Telegraph Works (1874) L.R. 97, 101.] In. App. Taking the company’s property where the … MANAGER NYAMWEZI CREAMERIES TABORA v. KILUGALA MALOMO. 11  2 W.L.R. Certain provisions of the articles cannot be altered except with the prior approval of the Central Government. Such alteration involves deletion of any restrictions and limitations required to be inserted in the articles of a private company. See Daniels V Daniels: Frank and Ors V Abdu: Prudential Assurance Co Ltd V Newman Industries (No.2). The reasoning of Danckwerts J. is hardly consistent with the approach apparent in Menier v. Hooper's Telegraph Works (1874) 9 Ch.App. App. Validity of such alteration depends on the nature of the contract. There are specific steps that needed to be followed for altering the AOA of a company –. Most of the cases in which the principle has actually been applied appear to fall within one of the following two classes:-1. It should be added that no mere informality or irregularity which can be … Menier v. Hooper’s Telegraph Works Ltd (1874) 9 Ch. As the case must be remanded to the district court for further proceedings as above stated, we deny these several petitions without expressing any opinion on their merits and without prejudice to the right to apply to the district court for leave to intervene and to share in the benefits of the decree. might be awarded: see Menier v. Hooper’s Telegraph Works (1874) 9 Ch App 350. But the situation will be different if apart from the articles, there is an independent contract. PEEL v. LONDON AND NORTH WESTERN RAILWAY CO. LEOPOLD WALFORD (ZAMBIA LTD) v. A.H. HUNTER, CRANLEIGH PRECISION ENGINEERING LTD. v. BRYANT, THOMAS BORTHWICK & SONS (AUSTRALASIA) LTD. Wrongdoers in Control – where by an order of the Court on application under sections 397 or 398 (for relief in case of oppression or mismanagement) the company is required to alter its memorandum or articles, the company will then be precluded without the consent of the court from making any further alterations inconsistent with the order of the Court. IN THE MATTER OF BAHIA AND SAN FRANCISCO RAILWAY CO. should be added that no mere informality or irregularity which can be remedied by the majority will entitle the minority to sue, if the See also Menier V Hooper’s Telegraph Works. The majority shareholder ‘Hooper’ found that it could make a greater profit by selling the cable to another company which wished to lay it down on the same route, but which would not buy unless it … Subsequently, the company was amalgamated with another company and new articles were adopted. BAILLIE v. ORIENTAL TELEPHONE AND ELECTRIC COMPANY... RUSSELL v. NORTHERN BANK DEVELOPMENT CORPORATION LTD. TATA HYDRO-ELECTRIC AGENCIES LTD v. COMMISSIONER O... LIQUIDATOR, RHODESIA METALS v. COMMISSIONER OF TAXES. For a recent summary of the process of reception of the common law into Canada, see P.W. The latter gave power to the company to dismiss a director and accordingly S was removed from office as director and the company treated, him as having ceased to be one. A Company Secretary is authorized to issue the notice of the general meeting. The Court of Appeal, in Berendsen, Ltd. v. It was … 2 In Burland v. Earle  A.C. 83, 93. There is no case, relating to a fraud on a minority, which indicates that the court can go beyond seeing whether the wrongdoers are in control, or is concerned to.see what other, independent shareholders think. v. Jensen (supra). File Form MGT-14 (Filing of Resolutions and agreements to the Registrar under section 117) with the Registrar along with the requisite filing within 15 days of passing the special resolution, along with documents like certified true copies of the special resolutions along with explanatory statement; a copy of the Notice of meeting sent to members along with all the annexure; and a printed copy of the altered Article. It can be best understood in the landmark Menier Case It was held that Hooper’s machinations for profits derived from the improper arrangements it had made amounted to an oppressive expropriation of the minority shareholders, and that a derivative action would therefore lie against it. It ceases to be private company and becomes public company from the date of such alteration. 2332 of 1997.. Bharat Insurance Company Ltd v. Kanhaiya Lal, AIR 1935 Lah. 12 Burland v. Earle  A.C. 83, 93, per Lord Davey. 350) 9. 13. Follow this and additional works at: https://scholarlycommons.law.case.edu/cuslj Part of the Transnational Law Commons ... Stevens & Sons, 1969). Under Section 14 of the Companies Act, 2013, by a special resolution a company has powers to alter its articles to suit its requirements from time to time, subject to (a) the provisions of the Act, and (b) the conditions contained in the company’s memorandum. In Evans v. Chapman, (1902) 96 LT 381 case, the Court held that a mistake, whether clerical or any other, in the articles of a company can only be rectified by altering the articles by special resolution in accordance with this section. 3 Ibid. " Menier v. Hooper's Telegraph Works (1874) L.R. 350 case, the Court held that the power to alter the articles must be exercised in good faith for the benefit of the company as a whole. In Andrews v. Gas Meter Co. Ltd. (1897) 1 Ch.361 case, the Court held that Articles may be altered to explain ambiguous portions or to supplement the memorandum with regard to those things upon which it is silent. Daniels V Daniels, Alexander V Automatic Telephone Co, Melifonwu V Egbuj. Posted by Menier v. Hooper’s Telegraph Works Ltd., (1874) 9 C App. 350 Company meetings. Case on Misappropriation of corporate opportunities English approach: Menierv Hooper’s Telegraph Works (1874) Co obtained a licence to lay cables. any alteration resulting in an increase in the remuneration of any director including a managing director or whole time director in the case of a public company or a private company which is a subsidiary of a public company. Some examples are as follows: Alteration can neither be beyond the provisions of the Companies Act nor the memorandum of association. APP. I am confirmed in that view by the case of Menier v Hooper's Telegraph Works, where Lord Justice Mellish observes: “I am of opinion that, although it may be quite true that the shareholders of a company may vote as they please, and for the purpose of their own interests, yet that the majority of shareholders cannot sell the assets of the company and keep the consideration.” In other words, he admits that a … 350. One of the directors obtained a licence in his own name & formed another Co to exploit the contract. Conversion of Public Limited Company into Private Limited Company involves alteration of article of association of Public Company under Section 14 which cannot be done without passing special resolution of shareholders in the General Meeting and approval of the Tribunal. It . For More Articles on Company Law Click Here. This decision is in consonance with the principle that articles do not constitute any contract between the company and outsider. In Menier v Hooper’s Telegraph Works, a company altered its articles in a manner that some other company was benefitted thereby but the alteration was not beneficial to the company itself. Mason v. Harris (1879) 11 Ch.D. In Chittambram Chettiar V. Krishna Aiyanger I.L.R. 350: 43 L. J. Ch. Furthermore, the position in the tax cases seems to be exactly the opposite to that which he took up in Pavlides' case. JJ., in Menier v. Hooper's Telegraph Works  9 Ch. Is the alteration such that it sanctions anything which is illegal or against public policy? 330: 30 L. T. 209: 22 W. R. 396, where the majority of the shareholders had improperly appropriated to themselves property which belonged to all the shareholders equally. A case which illustrates the latter proposition is Fitzsimmons v R in the Western Australian Court of Criminal Appeal where the applicant was convicted of offences, including breach of a duty to act honestly in connection with a takeover. McCracken v Phoenix construction – Damages under s 1324 Court held that s 1324 (10) does not allow the court to award damages to a creditor for contravention of 182 (1) Menier v Hooper’s Telegraph Works: Equitable limitation. Hodgson V National and Local Government Officials Association. They are: Conversion of Private Company into Public Company: Legal Provisions related to Conversion of Private Company into Public Company are given in Section 18 and 14 of the Companies Act, 2013 read with Rule 33 of Companies (Incorporation) Rules, 2014. Hold General Meeting under Section 101 of the Act and pass the resolutions related to the alteration of articles with a special majority. Looking to the above, it may be stated that power of a company to alter its articles is not an absolute power.  (Russell v. Wakefield Waterworks Co.  LR 20 EQ 474). In the case of Menier v Hooper’s Telegraph Works where Menier was a minority shareholder who complained that there were self interested transactions between a majority member and the company. MENIER v. HOOPER’S TELEGRAPH WORKS Shareholders' suits. Alteration made bonafide and in the interest of the company shall be valid even if they are likely to affect adversely the personal interests of some of the members of the company. In this case, where Menier a minority shareholder complained that there were self-interested transactions between a majority member and the company, the court held that a minority shareholder's action was properly bought in these circumstances. App. Notices are also to be sent to all stock exchanges on which the shares of the company are listed. Conversion of Public Company into Private Company: Legal Provisions related to Conversion of Public Company into Private Company are given in Section 18 and 14 of the Companies Act, 2013 read with Rule 33 of Companies (Incorporation) Rules, 2014. Bogert v. Southern Pacific Co., 226 Fed. Menier v Hooper’s Telegraph Works (1874) is an example of misappropriation of corporate assets. Notice of EGM shall be given at least 21 days before the actual date of EGM. Since the company was a defendant it could not also be a plaintiff, and accordingly the action was traditionally framed as an action by the plaintiff “on behalf of himself and all other shareholders in the company except the defendants”. 13 Cook v. Deeks  A.C. 554; perhaps even opportunities that the company could not have used: Industrial Development Consultants v. Cooley  1 W.L.R. 500.