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SHAREHOLDER DISPUTES: Improper intentions

01 April 2016  

Noel McMichael and Nicole Finlayson consider a recent Supreme Court ruling

In December 2015, the Supreme Court handed down a significant judgment on the nature and effect of the ‘proper purpose’ rule in company law and when the presence of an improper purpose will invalidate a decision of directors ((1) Eclairs Group Ltd (2) Glengary Overseas Ltd v JKX Oil & Gas plc [2015]). In doing so, it overturned the previous decision of the Court of Appeal and restored the decision at first instance. The judgment is interesting for its analysis of how the ‘proper purpose’ provisions interact with other provisions of the Companies Act 2006 (the Act) which are intended to protect companies from external, rather than internal, interference/manipulation.

Additional Info

  • Case(s) Referenced:

    (1) Eclairs Group Ltd (2) Glengary Overseas Ltd v JKX Oil & Gas plc [2015] UKSC 71