Anthony Pavlovich

Protecting shareholders against transactions with an improper purpose

This article discusses the recent case of Tianrui (International) Holding Company Ltd v China Shanshui Cement Group Ltd [2024] UKPC 36, [2024] 3 WLR 986 in which the Privy Council explained the personal right of shareholders to challenge share issues undertaken for an improper purpose. The right derives from the contractual relationship between the shareholders and the company, and the fiduciary duties thereby imposed on the directors. The resulting claim has implications for banks that may be involved in a company’s activities, for example as lenders or corporate advisers.