A good faith clause in a Shareholders’ Agreement is of little benefit
In the latest twist in the ongoing shareholder dispute over control of the parent company of London hotels the Connaught, the Berkeley and Claridge’s, the Court of Appeal has considered the effect of a good faith clause in a Shareholders’ Agreement to be minimal. The judgment in Re Coroin *2013+ EWCA Civ 781 also has implications for signatories of partnership and LLP agreements.
A shareholder of 36.2 per cent of the issued share capital of Coroin Limited (Coroin), Patrick McKillen contended that pre-emption rights contained in the Shareholders’ Agreement had been engaged when Derek Quinlan, who was also a director of Coroin, transferred control of his shareholding.
From 2009, Mr Quinlan found himself in financial difficulty and took steps to increase his liquid assets. In early 2011, he had discussions with and was provided finance by three companies controlled by the trustees of the Sir David and Sir Frederick Barclay family settlements (the Barclay Interest)…
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This decision represents a welcome return to the ‘pay for what you use’ principle and strikes a fairer balance between different creditor and expense groups.
Winckworth Sherwood has provided a summary of the Trusts (Capital and Income) Act 2013.