Expropriation of shares via the corporate constitution

• Main Author: BULL, Stephen
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2024
• Subjects: Asian Studies; Business Organizations Law
• Online Access: https://ink.library.smu.edu.sg/sol_research/4503; https://ink.library.smu.edu.sg/context/sol_research/article/6461/viewcontent/36SAcLJ25_pvoa.pdf
• Institution: Singapore Management University

Company constitutions sometimes include powers to effect compulsory share acquisitions from members. Where these are introduced into the constitution after incorporation, the amendment, like all constitutional alterations, must be able to satisfy the common law “bona fide test” in order to be valid. The content of this test has been much debated since the first cases a century ago, and differences in view have emerged from the English and Australian courts. While there is no local case law on such expropriations per se, the High Court recently confirmed for the first time the applicability in Singapore of the common law test for constitutional amendments. This article reviews the development of the test in relation to the introduction of compulsory acquisition powers and analyses the most recent cases in the UK courts, which have largely confirmed the traditional English approach.