When the company began to do badly the owner took

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were not covered by any contract. When the company began to do badly, the owner took over as MD and told O that he would no longer receive 50% of the profits or 50% of the shares. O left the company and petitioned under s. 459 CA 1985 (Similar to s. 994) claiming that his legitimate expectations of membership had been unfairly prejudiced. It was held that O was not legally entitled to either the 50% share or 50% of the profits, therefore no legitimate expectation could arise from them to give rise to a conclusion of unfair prejudice under s. 459. 23.4.4.1 Orders the court could make S. 996 (1) empowers the court, if it thinks that an action was well-founded, to make such orders as it thinks fit to give relief from the matters complained, including (but not limited to): • An order to regulate the affairs of the company in the future • An order requiring the company to stop doing the act complained of, or to do an act which it has omitted. • An order authorising civil proceedings to be brought in the name or on behalf of the company by certain persons under terms specified by the court • An order for the purchase by the company or other members of the shares of any members of the company at the market price • An order preventing the alteration of company articles without court approval In order to give effect to its order the court may alter or insert new provisions in the company’s memorandum and articles. The company cannot, without the permission of the court, change any such alteration or insertion. 23.4.5 THE JUST AND EQUITABLE WINDING-UP Under s. 122(1)(g) Insolvency Act 1986 , a member of a company may petition the court to wind it up on the ground that it is just and equitable to do so. In order to be able to petition for winding up under this provision, the petitioner has to show (as in s. 994 CA 2006) that the wrongdoing affects him in his capacity as a member and not in any other capacity. See Lock v John Blackwood Ltd [1924] AC 783 , and Ebrahimi v Westbourne Galleries Ltd. (1973) AC 360. This type of winding-up is discussed more fully in chapter 28. Download free eBooks at bookboon.com
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BUSINESS ORGANISATIONS AND AGENCY MEMBERS’ POWERS AND THE PROTECTION OF MINORITIES 423 23.5 CHAPTER SUMMARY • The powers of companies are shared between owners and directors of companies; while members have the power of control, directors have the power of management • The powers of control which members have are usually exerted by persons who hold the majority shares or interest in the company • The powers of control of company members include the power to make an alter the articles of association; the power to make resolutions; the power to appoint and remove directors; the power to authorise and approve certain actions of directors; and the power of residual management. The exercise of control by majority shareholders (or members) especially those who are also directors may be detrimental to the interests of minority shareholders and the company. This makes it necessary to have rules to protect them.
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  • Fall '19
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