Re Smith and Fawcett Ltd
1942 · [1942] Ch 304 (CA)
Posted By lanbuk.com
- Facts
- The articles gave the directors an absolute discretion to refuse to register share transfers. They refused to register a transfer of a deceased member's shares to his executors.
- Issue
- Was the refusal valid?
- Held
- Yes. Directors must act in what they, not the court, consider to be in the interests of the company, and not for a collateral purpose. They had done so.
- Principle
- The good faith duty is subjective: what the directors honestly believe is in the company's interests.
- Why it matters
- Section 231(2) adopts the same subjective approach.
Words and Latin in this note
- Bona fide purchaser
- A person who buys a legal estate in good faith, for value, without notice of an earlier equitable right. That earlier right does not bind them. Open the note.
For study only. By lanbuk.com. Always check current sources and consult a qualified professional.