I remember from 7 years ago when I first took an undergrad introduction to political science course and first learned about Jeremy Behtan’s utilitarianism theory and John Stewart Mill’s theories on democracy. Betham was a liberal and an utilitarian who argued that if people were free to do what was in their best interest and whatever that gave them the most utility, society’s overall utility would increase and hence benefit society as a whole. Mill echoed this and said that people should be free to do as they want to increase utility, but subject to one qualification. That qualification is that a person can do as he/she wishes as long as it does not harm others.
Mill also talks about democracy and the tyranny of the majority. He says that minority rights could be infringed upon if everything was decided by the majority for interests of the majority. He suggested and democratic checks and balances and constitutional rights (bill of rights) could protect against the tyranny of the majority.
I mention my vague recollections of Mill because reading about minority shareholder rights in Allen v Gold Reefs and Greenhalgh v Arderne Cinemas and how the judges tried to deal with the issues were reminiscent of Mill’s approach to democracy and utilitarianism.
In the first case, the judge considers two arguments. The first argument was argued by Justice Peterson in Dafen where he argues that it is unjust for the majority to expropriate and decide what is in a corporation’s benefit and that the majority should not have the power to make decisions (power to change articles) unless it was for the company’s benefit. He seems to take an interventionist stance where the courts would be allowed to decide what was in the company’s interest and benefit. On the other hand, Scrutton J and Banks LJ cited in Allen state that courts should not be interfering in a corporation’s decision as to what was in the benefit of a company. In Greehalgh, the judge finds in faour of the latter approach and says that the term “benefit to the corporation as a whole” does not mean the corporation as a commercial entity, but means the body of corporators generally. He further argues that if it was in the honest opinion of a voter what was in the best interest of the corporation and the majority decided the same way, that decision should not be impeached by the courts. Furthermore, the judge states that the voters/shareholder is not required to disassociate himself/herself from their own perspectives and consider the benefit to the company as a “going concern.” However, there is one exception to this argument which is that a resolution by the majority should not provide an unfair advantage for the majority that the minority is deprived of.
I think that this line of reasoning very similar to Jeremy Bentham and Mill’s theories. A shareholder/voter in a resolution could vote however it wanted according his own prospects and interests if he honestly believed that the decision would benefit the body of corporators. However, if the resolution provided an unfair advantage to the majority then the courts would step in to correct and fix the tyranny of the majority. I could infer that based on these two decisions that at leas in the English courts in the 1950s classic liberalism prevailed and that the economic trend at that time would not have been much different.
