In Re Sherborne Park Residents Co Ltd (1986) 2 B.C.C. 99528 Ch (Companies Ct), Hoffmann J held that an action by a shareholder seeking to set aside an improper issue of shares, as in Howard Smith Ltd v Ampol Petroleum Ltd [1974] A.C. 821 PC, was not a derivative claim at all but a personal claim by the individual shareholder who is aggrieved by it (at 99530– 99531):"Although the alleged breach of fiduciary duty by the board is in theory a breach of its duty to the company, the wrong to the company is not the substance of the complaint.
The company is not particularly concerned with who its shareholders are since the true basis of the action is an alleged infringement of the petitioner's individual rights as a shareholder. The allotment is alleged to be an improper and unlawful exercise of the powers granted to the board by the articles of association, which constitute a contract between the company and its members. These are fiduciary powers, not to be exercised for an improper purpose, and it is generally speaking improper '...for the directors to use their fiduciary powers over the shares in the company purely for the purpose of destroying an existing majority, or creating a new majority which did not previously exist. [See Lord Wilberforce in Howard Smith v Ampol Petroleum [1974] A.C. 821 at 837.]'.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.