Hogg v Cramphorn Ltd [1967] Ch 254

Court: High Court

Facts: To prevent a takeover bid by Mr. Baxter, the board of Cramphorn Ltd, including Colonel Cramphorn, issued shares with enhanced voting rights to a welfare scheme including the Colonel. This was intended to block Baxter's bid. Mr. Hogg, a shareholder, contested the issuance, claiming it was ultra vires.

Issue: Was the issuance of shares to block a takeover an improper use of the directors' powers?

Held: The High Court invalidated the share issuance, ruling it was an improper exercise of the directors' powers.

Key Judicial Statement: The court found that the issuance of shares was done purely to thwart a takeover, which was not in line with the directors' duties.

💡 Leveluplaw: Directors must exercise their power to issue shares in the interests of the company, not to frustrate takeover bids or for other improper purposes.