The Supreme Court handed down its judgment today in Progress Property Company Limited v Moorgarth Group Limited [2010]. The issue involved in the case was whether the sale at undervalue of a company’s assets to its shareholder is ultra vires, in accordance with the common law rule, in circumstances where the director who procured the sale (acting on behalf of both the company and the shareholder) subjectively believed the sale to be at a proper market value.
The court unanimously held that the transaction in question was not an unlawful distribution and set out guidance in this regard.
See complete judgement here.
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