Power Adhesives Ltd v Sweeney & Ors

Power Adhesives Ltd v Sweeney & Ors

The directors breached their fiduciary duties by failing to consider the dilution of ordinary shares and serious tax consequences resulting from the issue of 490,000 B shares. The transaction is voidable and should be set aside.

Parties
Claimant: Power Adhesives Limited; Defendant: Stephen James Sweeney; Defendant: Jane Elizabeth Sweeney; Defendant: Katherine Anne Sweeney; Defendant: Michael Francis Fenton; Defendant: William David Howlett; Defendant: Peter John Cook; Defendant: Her Majesty’s Revenue and Customs
Jurisdiction
England and Wales
Judgment Date
31 March 2017
Procedural Posture
Part 8 Claim / Judgment After Disposal Hearing
Outcome
Declaration granted; transaction set aside
Legal Topics
Directors' Fiduciary Duties, Share Allotment, Hastings Bass Principle, Voidable Transactions
Company Law Equity and Trusts Directors' Fiduciary Duties Share Allotment Hastings Bass Principle Voidable Transactions

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Parties

Power Adhesives Limited

Claimant

Stephen James Sweeney

Defendant

Jane Elizabeth Sweeney

Defendant

Katherine Anne Sweeney

Defendant

Michael Francis Fenton

Defendant

William David Howlett

Defendant

Peter John Cook

Defendant

Her Majesty’s Revenue and Customs

Defendant

Procedural Posture

Part 8 Claim / Judgment After Disposal Hearing

Legal Issues

  1. 1 Whether the directors breached their fiduciary duties in issuing 490,000 B shares to Peter Sweeney
  2. 2 Whether the transaction is voidable under the Hastings-Bass principle

Ratio Decidendi

The directors breached their fiduciary duties by failing to consider the dilution of ordinary shares and serious tax consequences resulting from the issue of 490,000 B shares. The transaction is voidable and should be set aside.

Court Disposition

Declaration granted; transaction set aside

Orders

  • The decision to issue 490,000 B shares to Peter Sweeney is voidable and set aside.