Brady v Brady

Brady v Brady

Court	House of Lords
Citation(s)	[1988] BCLC 579
Keywords
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Brady v Brady [1988] BCLC 579 is a UK company law case concerning the prohibition on financial assistance.

Facts

T. Brady & Sons Ltd and its subsidiaries went through restructuring after the two brothers that owned the majority of shares fell out and wished to divide the company’s assets. One part of the process involved paying financial assistance to reduce liability on the company buying some of the shares. The fact that it was financial assistance was accepted, but it was argued that this was not the main purpose, relying on what is now the CA 2006 section 678(4) exception.

Judgment

Lord Oliver held the requirement is the assistance is given in good faith and in the best interests of the company, a subjective standard. He rejected that a ‘larger’ purpose of freeing deadlock would suffice for almost anything, and so on this ground the exemption was not fulfilled.

“

The acquisition was not a mere incident of the scheme devised to break the deadlock. It was the essence of the scheme itself and the object which the scheme set out to achieve.

”

Sources on company shares

Birch v Cropper (1889) 14 App Cas 525

Andrews v Gas Meter Co [1897] 1 Ch 361

Borland’s Trustee v Steel Brothers & Co Ltd [1901] 1 Ch 279

CA 2006 ss 33 and 282-4

Scottish Insurance Corp v Wilsons & Clyde Coal Ltd [1949] AC 462

Dimbula Valley (Ceylon) Tea Co v Laurie [1961] Ch 353

Will v United Lankat Plantations Co Ltd [1914] AC 11

Re Bradford Investments Ltd [1991] BCLC 224

Second Company Law Directive 77/91/EEC

CA 2006 ss 549-551 and 561-571

CA 2006 ss 10 and 617

Re Scandinavian Banking Group plc [1988] Ch 87

see UK company law

UK company law

Notes

References

External links

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