2 Was it bona fide 3 Did it benefit the company and promote the prosperity of

2 was it bona fide 3 did it benefit the company and

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2) Was it bona fide? 3) Did it benefit the company and promote the prosperity of the company? (However, where is no clause, this test applies)
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Re Lee Behrens (1932) Where there is no express corporate gifts object, must look at whether: 1) Was it reasonably incidental to the company's business? 2) Was it bona fide? 3) Did it benefit the company and promote the prosperity of the company?1) Was it reasonably incidental to the company's business? Simmonds v Heffer (1983) No corporate gift clause in the company's objects, and so: 1) General purpose donation was ultra vires however; 2) Commitment to animal welfare donations were within the purposes of the business and so intra vires. Hely-Hutchinson v Brayhead Ltd Said (before s.41 CA06) that a transaction must be 'intimately' connected to a D's role in order for them to be considered a corporate insider. Re Torvale Group Ltd (1999) If a transaction with a third party (under s.40) involves more than two parties and only one is a corporate insider (a director or a person connected to a director under s.252 CA06) then the court can sever the transaction on just grounds. (So discretion of the court?) Breach of director's duties What may happen following a breach of a D's duties? 1) Board of directors may take action against the D 2) A D in breach will bring down the value of the business, reducing the value of the shares, making the company vulnerable to a hostile takeoever - the Market for Corporate Control 3) S.212 IA86 - liquidator can look to the director in breach. 4) What about where the board are in breach or if the those in breach are majority SHs or if there is ratification of the breach? Look to derivative actions.
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Minority SH May own as much as 50% - to have a majority you need just over 50%. May own most of the shares but still be a minority SH because you don't have a majority of voting rights. Yet in a derivative action it is the company which is wronged, not the SHs - hence why 'derivative' in the company's name. Barrett v Duckett (1995) Multiple voting rights may make a minority SH a majority vote holder. Article 3 Model Articles CA06 Management of the company and exercise of all its powers is delegated to the board - not the SHs S.33(1) CA06 The provisions of the constitution bind the company and its members to the same extent as if there were covenants on the part of the company and of each member to observe these provisions. And the constitution says that the board has the power to litigate. (Of course, majority can out vote Ds, but they cannot sue a current board) Foss v Harbottle (1843) If a wrong is alleged to have been done to the company, then the proper claimant is the company itself. No individual member can sue in respect of any wrong which is ratifiable by ordinary resolution of the members - the GM reflects the will of the company.
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