| Commentary

154 Voidable allotments—allotments for an improper purpose

| Commentary

154 Voidable allotments—allotments for an improper purpose

Even though all the statutory procedures have been complied with on an allotment, the allotment may be challenged on the grounds that the shares have been issued for an improper purpose. Shares will almost always be allotted by the directors of a company who owe various statutory duties to the company including the duty to act within their powers and the duty to promote the success of the company1. Under the first of these duties, a director must act in accordance with the company’s constitution and only exercise powers for the purposes for

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