Borland's Trustee v Steel Brothers & Co Ltd

• Borland was a shareholder in Steel Brothers & Co Ltd.
• Borland became bankrupt and his trustee in bankruptcy claimed the shares.
• The articles contained a provision requiring shares to be offered to existing members before transfer to outsiders.
• The trustee argued that a share was simply a sum of money (property) that vested in him on bankruptcy.

1. What is the legal nature of a share: is it simply a sum of money or something else?

• Farwell J held that a share is not a sum of money but is an interest measured by a sum of money and comprising various rights under the contract formed by the memorandum and articles. These rights include the right to participate in dividends, to vote at meetings, and to share in surplus assets on winding up. The articles' restrictions on transfer were valid and binding.

A share in a company is the interest of a shareholder in the company measured by a sum of money, for the purpose of liability in the first place, and of interest in the second, but also consisting of a series of mutual covenants entered into by all the shareholders inter se in accordance with the Companies Act. It is a bundle of contractual rights: not a sum of money but a chose in action constituting an interest measured by money.