Re Blue Arrow plc [1987] BCLC 585 is a UK company law case dealing with unfair prejudice under s 459 Companies Act 1985

Companies Act 1985

The Companies Act 1985 is an Act of the Parliament of the United Kingdom of Great Britain and Northern Ireland, enacted in 1985, which enabled companies to be formed by registration, and set out the responsibilities of companies, their directors and secretaries.The Act was a consolidation of...

 (now s 994 Companies Act 2006

Companies Act 2006

The Companies Act 2006 is an Act of the Parliament of the United Kingdom which forms the primary source of UK company law. It had the distinction of being the longest in British Parliamentary history: with 1,300 sections and covering nearly 700 pages, and containing 16 schedules but it has since...

).

Facts

Mrs Watson-Challis was in the recruitment agency business. Between 1956 and 1982 she had built up a variety of businesses. In business she went by the pseudonym

Pseudonym

A pseudonym is a name that a person assumes for a particular purpose and that differs from his or her original orthonym...

 of "Sheila Birch". Then she met Mr Berry. They were impressed by each others' business talents and decided to set up a new company. She transferred her business and shareholdings to the new firm, Blue Arrow

Blue Arrow

Blue Arrow Limited is a United Kingdom based employment and recruitment agency that places individual jobseekers in employment and provides businesses with temporary and/or permanent staff in the industrial sector, catering sector, driving sector, logistics sector and office sector.The head office...

, in which she took a 45% stake. Mr Berry took a 55% stake. Blue Arrow had a variety of subsidiaries. Mrs Watson-Challis was the executive director of the subsidiaries and the "president" of the parent, while Mr Berry was the chairman. By 1984, Mrs Watson-Challis was travelling overseas, and no longer taking an active part of the company's affairs. The company was floated, it went public. Over time, with many others buying up new share offerings, her percentage of the shareholding went down to 2.1%. She resigned her directorships, but her position as "president" remained written into the company's constitution, the articles of association

Articles of Association

The Continental Association, often known simply as the "Association", was a system created by the First Continental Congress in 1774 for implementing a trade boycott with Great Britain...

. Then she decided she wanted to come back. The management resisted, and they resolved to alter the company's articles so that she could be removed from her position as president. She petitioned the court that such action was "unfairly prejudicial" because she had a legitimate expectation to participate in the company's affairs.

Judgment

Vinelott J refused to grant relief to the petitioner. An alleged agreement that she should remain as the chairman was not looked on favourably in this public company, because it contradicts the principle that in public companies information material to good governance should be disclosed to shareholders. Investors are entitled to assume that the whole of the company's constitution is written in the constitution (not some existential "legitimate expectation"). Particularly, the right to be the company president was a personal right (not a class right) and it could be altered by special resolution. Vinelott J stated,