In the latest issue of ThoughtLeaders4 FIRE Magazine, Wilson Leung examines the Privy Council’s decision in Tianrui (International) Holding Co Ltd v China Shanshui Cement Group Ltd [2024] UKPC 36, which affirms that a shareholder has a personal right of action to challenge an improper share allotment, even though the directors’ fiduciary duty to act for a proper purpose is owed to the company (rather than shareholders). The judgment provides – for the first time at the appellate level – a principled justification for this right, grounding it in the ‘corporate contract’ between shareholders and the company, as constituted by the memorandum and articles of association. This decision is likely to have material implications for shareholders’ rights more broadly, as the Privy Council’s analysis based on the corporate contract could well be applicable to other breaches of fiduciary duties committed by directors.

The piece was first published with ThoughtLeaders4 FIRE Magazine.