Scottish Co-operative Wholesale Society Ltd v Meyer
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''Scottish Co-operative Wholesale Society Ltd v Meyer'' 959AC 324 is a
UK company law British company law regulates corporations formed under the Companies Act 2006. Also governed by the Insolvency Act 1986, the UK Corporate Governance Code, European Union Directive (European Union), Directives and court cases, the company is th ...
case, concerning the predecessor of the unfair prejudice provision, an action for "oppression" under section 210 of the
Companies Act 1948 The Companies Act 1948 ( 11 & 12 Geo. 6. c. 38) was an Act of the Parliament of the United Kingdom, which regulated UK company law. Its descendant is the Companies Act 2006. Cases decided under this Act *'' Bushell v Faith'' 970AC 1099 *'' Sc ...
(now section 994 of the
Companies Act 2006 The Companies Act 2006 (c. 46) is an act of the Parliament of the United Kingdom which forms the primary source of UK company law. The act was brought into force in stages, with the final provision being commenced on 1 October 2009. It largel ...
). The judgement remains a leading precedent for the clear statement that the
duty of care In Tort, tort law, a duty of care is a legal Law of obligations, obligation that is imposed on an individual, requiring adherence to a standard of care, standard of Reasonable person, reasonable care to avoid careless acts that could foreseeab ...
of a director is to the company itself, and not to the interests of particular shareholders. It also illustrates the reluctance of English law to "admit the reality of interrelated companies acting in any way other than as a number of separate entities tied together by their relationship as significant shareholders in each other."Dine, 32, and passim


Facts

The Scottish Co-operative Wholesale Society Ltd. set up a new company called "Scottish Textile & Manufacturing Co Ltd" with Dr Meyer and Mr Lucas. They manufactured
rayon Rayon, also called viscose and commercialised in some countries as sabra silk or cactus silk, is a semi-synthetic fiber made from natural sources of regenerated cellulose fiber, cellulose, such as wood and related agricultural products. It has t ...
cloth. Back then, one required state licensing and to get a license experienced managers were needed. Dr Meyer and Mr Lucas were the managing directors, with some shares, while the Scottish Co-op held the majority of the company's shares and appointed the other three directors to the board. These three were also directors of the Scottish Co-op itself. In 1952, the licensing system was ended by the government. So Scottish Co-op used its majority of votes to transfer all the business to a branch of the Co-op. It also cut off the supplies of raw materials. The company could not continue, no profits were made and the share value crashed. Mr Meyer and Mr Lucas felt oppressed and petitioned for relief under section 210 of the Companies Act 1948.
Lord Denning Alfred Thompson Denning, Baron Denning, (23 January 1899 – 5 March 1999), was an English barrister and judge. He was called to the Bar of England and Wales in 1923 and became a King's Counsel in 1938. Denning became a judge in 1944 when he w ...
said,


Judgment

The House of Lords held that the conduct of the majority was indeed oppressive, and ordered that Dr Meyer and Mr Lucas' shares be bought at a price that was fair. Lord Denning's speech continued.


See also

*
UK company law British company law regulates corporations formed under the Companies Act 2006. Also governed by the Insolvency Act 1986, the UK Corporate Governance Code, European Union Directive (European Union), Directives and court cases, the company is th ...


Notes


References

*Dine, Janet and Koutsias, Marios, ''Corporate Law'', 6th edn, Palgrave Macmillan, London, 2008, {{English law types United Kingdom company case law 1959 in British law Lord Denning cases House of Lords cases 1959 in case law Co-operatives in Scotland