Cumbrian Newspapers Group Ltd v Cumberland & Westmorland Herald Newspaper & Printing Co Ltd [1986] BCLC 286
Citation:Cumbrian Newspapers Group Ltd v Cumberland & Westmorland Herald Newspaper & Printing Co Ltd [1986] BCLC 286
Link to case on WorldLII (reference).
Rule of thumb:Can special rights some shareholders are given be taken away by a resolution of 75% of the other shareholders? As a general rule, the answer to this is no – special shareholders can sue to have this resolution reduced as null and void.
Judgment:
Where a shareholder is given extra rights these are called ‘special rights’. These ‘special rights’ are also not able to be altered by special resolutions (75% of the members/shareholders agreeing to re-write the company Articles of Association), ‘special rights on one or more of its members in the capacity of member or shareholder... three main categories of "special rights" that might exist: (1) rights annexed to shares (2) rights for particular people under the constitution, and (3) rights unattached to particular shares but conferring a benefit on a group of members. Strictly they could not fall into the first category of rights ‘annexed to’ particular shares, because CNG’s special rights came from the constitution. A second classification of right might be like that in Eley v Positive Government Security Life Assurance Co Ltd but they were not like that either. A third category involves rights or benefits that, although not attached to any particular shares, were nonetheless conferred on the beneficiary in the capacity of member or shareholder of the company... It would, in my opinion, be surprising and unsatisfactory if class rights contained in articles were to be at the mercy of a special resolution majority at a general meeting, unless they were rights attached to particular shares.’ So, he said that the phrase ‘was intended by the legislature to cater for the variation or abrogation of any special rights given by the memorandum or articles of a company to any class of members, that is to say, not only rights falling into the first category I have described, but also rights falling into the third category’, Scott J
Warning: This is not professional legal advice. This is not professional legal education advice. Please obtain professional guidance before embarking on any legal course of action. This is just an interpretation of a Judgment by persons of legal insight & varying levels of legal specialism, experience & expertise. Please read the Judgment yourself and form your own interpretation of it with professional assistance.