Borland’s Trustee v Steel Brothers & Co Ltd
Encyclopedia
Borland’s Trustee v Steel Brothers & Co Ltd [1901] 1 Ch 279 is a UK company law case, concerning the enforceability of a company's constitution and the nature of a company share
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. Mr JE Borland held 73 £100 shares and went bankrupt, and so the company gave Borland’s Trustee in bankruptcy notice of the transfer. The trustee argued the article was void because it compromised ownership and property rights and tended to perpetuity, against the rule against perpetuities
. It requested an injunction against the share transfer at all, or at anything less than a fair value.
.’ The argument about perpetuity has no application because the rule against perpetuities does not apply to personal contracts.
Share
Share may refer to:to some dume life* To share a resource is to make joint use of it; see sharing.* Share , a man who writes Urdu poetry* Share , a stock or other security such as a mutual fund...
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Facts
Steel Bros Ltd’s articles said if a member went bankrupt his shares would be transferred to designated persons at a fair price not above par valuePar value
Par value, in finance and accounting, means stated value or face value. From this comes the expressions at par , over par and under par ....
. Mr JE Borland held 73 £100 shares and went bankrupt, and so the company gave Borland’s Trustee in bankruptcy notice of the transfer. The trustee argued the article was void because it compromised ownership and property rights and tended to perpetuity, against the rule against perpetuities
Rule against perpetuities
The common law rule against perpetuities forbids some future interests that may not vest within the time permitted; the rule "limit[s] the testator's power to earmark gifts for remote descendants"...
. It requested an injunction against the share transfer at all, or at anything less than a fair value.
Judgment
Farwell J rejected Borland Trustee’s argument and held the article was valid. The transfer could be made, because the contract engendered in the articles of association are prior to the rights contained in a share. He said the argument that the article was repugnant to absolute ownership needed to assert, wrongly, that a share is a sum of money dealt with by executory limitations. But in fact a share is an interest and consists of ‘a series of mutual covenants entered into by all the shareholders inter se in accordance with section 16 of the Companies Act 1862Companies Act 1862
The Companies Act 1862 was an Act of the Parliament of the United Kingdom regulating UK company law, whose descendant is the Companies Act 2006.-Provisions:...
.’ The argument about perpetuity has no application because the rule against perpetuities does not apply to personal contracts.
See also
- UK company law
- Capacity in English lawCapacity in English law--------Capacity in English law refers to the ability of a contracting party to enter into legally binding relations. If a party does not have the capacity to do so, then subsequent contracts may be invalid; however, in the interests of certainty, there is a prima facie presumption that both...
- Agency in English lawAgency in English lawAgency in English law is a component of UK commercial law, and forms a core set of rules necessary for the smooth functioning of business.-Authority:...