Decided 14 December 1874 | End date December 14, 1874 | |
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Citation(s) (1874-75) LR 10 Ch App 96 Judge(s) sitting Lord Cairns LC, Sir WM James LJ and Sir G Mellish LJ Ruling court Court of Appeal of England and Wales Similar Bray v Ford, Industrial Development Consulta, Keech v Sandford, Boardman v Phipps, Regal (Hastings) Ltd v Gulli | ||
Parker v McKenna (1874-75) LR 10 Ch App 96 is a UK company law case, concerning the rule against having any conflict of interest.
Contents
Facts
Mr McKenna was one of four directors of the National Bank of Ireland, a joint stock bank. In 1864 resolutions were passed to increase the capital by issuing 20,000 £50 shares. They were to be offered to old shareholders first according to how many they already held, for a £25 premium and £5 as a first call. Any not bought would be sold by directors at a £30 premium. The directors allotted 9778 shares to a Mr Stock, who paid only £5 a share. It was arranged that the certificates would be withheld, the bank had a lien on the shares for the premiums and no transfer could be made till £30 was paid up. He then said he could not take so many and asked the directors to relieve him. They took many at £30 a share, and then sold them on at a profit. The £30 per share was always paid to the bank.
Judgment
Lord Cairns LC, Sir WM James LJ and Sir G Mellish LJ held that the directors had to account for all profits made through the sale of the shares.
James LJ made this famous statement: