Allen v Gold Reefs of West Africa [1900] 1 Ch 656

Court: Court of Appeal

Facts: The company amended its articles to extend a lien on shares to include paid-up shares after a shareholder's death, affecting his estate. The estate challenged the amendment, arguing it was made in bad faith.

Issue: Was the alteration to extend the lien valid, or did it constitute an abuse of power?

Held: The alteration was valid. The court ruled that the amendment was made in good faith for the benefit of the company as a whole.

Key Judicial Statement: Lord Lindley MR stated, "The power to alter the articles must be exercised, not only in the manner required by law, but also bona fide for the benefit of the company as a whole."

💡 Leveluplaw: Alterations to the Articles of Association must be made bona fide for the benefit of the company, not merely targeting specific individuals.