appear to be in the best interests of the company both subjectively and objectively. The statutory remedy for disadvantaged shareholders, s 459, may provide a remedy for H, but the courts have set their face against using the section to provide a remedy for shareholders who object to the board’s bona fide actions if they do not impinge upon the ‘legitimate expectations’ of the shareholder; see, for example, Re A Company (No 002567 of 1982) (1983), the wine bar case mentioned above, and Re Saul Harrison & Sons plc (1995). In the latter case, Hoffman LJ accepted, however, that there are cases where the memorandum and articles do not represent the understandings upon which the shareholders are associated and, in such cases, it may be unfair applying equitable considerations to a shareholder for those who control a company to exercise the powers set out in the memorandum and articles if to do so denies the legitimate expectations of the shareholder. He gives an example: the widow of a joint venturer might have legitimate expectations about the benefits she should receive from the company founded by her deceased husband.
The final complaint put forward by H concerns her dismissal as company secretary. H will have considerable difficulty, as we have seen, in blocking an amendment of the articles to delete this provision; but she may have an action for damages if the amendment (or dismissal without the amendment) is a breach of contract. However, H may not have an enforceable contractthere is no difficulty if she has a service contract independent of the articles (which is improbable) but, if she wishes to rely on the articles as providing the contract, she faces two difficulties. First, a contract based on the articles changes if the articles are validly altered (Read v Astoria Garage (1952)); and, secondly, even if the articles are not altered, it is unlikely that they give H an enforceable contractual right. The traditional view (which derives from the decision of...
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