Citation(s) [1897] 1 Ch 796 | ||
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Judge(s) sitting Lindley LJSmith LJRigby LJ Ruling court Court of Appeal of England and Wales | ||
In re Wragg Ltd [1897] 1 Ch 796 is a UK company law case, also relevant for English contract law, concerning shares, and the rule that shares should be exchanged for consideration that is in some sense at least sufficient, not necessarily adequate.
Contents
Facts
Mr Wragg and Mr Martin sold their omnibus and livery stable business to a newly incorporated company for £46,300. The company paid by issuing debentures and fully paid shares to Mr Wragg and Mr Martin. The liquidator of Wragg Ltd claimed that the company was (in return for the share issue) worth £18,000 less than the board had decided to pay.
Judgment
Lindley LJ held that the transaction was wholly legitimate. He noted that Ooregum Gold Mining Co of India v Roper decided shares cannot be issued at a discount, or below their nominal value, and continued.
Smith LJ concurred, saying if the consideration is ‘not clearly colourable nor illusory, then, in my judgment, the adequacy of the consideration cannot be impeached by a liquidator unless the contract can also be impeached’.