Scottish Co-operative Wholesale Society Ltd v Meyer

Scottish Co-operative Wholesale Society Ltd. v. Meyer AC 324 is a UK company law case, concerning the predecessor of the unfair prejudice provision, an action for "oppression" under s.210 Companies Act 1948 (now s.994 Companies Act 2006). It was decided in the House of Lords, by Viscount Simonds, Lord Morton of Henryton, Lord Keith of Avonholm and Lord Denning.

The judgement remains a leading precedent for the clear statement that the duty of care of a director is to the company itself, and not to the interests of particular shareholders. It also illustrates the reluctance of English law to "admit the reality of interrelated companies acting in any way other than as a number of separate entities tied together by their relationship as significant shareholders in each other."

Facts

The Scottish Co-operative Wholesale Society Ltd. set up a new company called "Scottish Textile & Manufacturing Co Ltd" with Dr Meyer and Mr Lucas. They manufactured rayon cloth. Back then, one required state licensing and to get a license experienced managers were needed. Dr Meyer and Mr Lucas were the managing directors, with some shares, while the Scottish Co-op held the majority of the company's shares and appointed the other three directors to the board. These three were also directors of the Scottish Co-op itself. In 1952, the licensing system was ended by the government. So Scottish Co-op used its majority of votes...
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