Equal share allotment in a private company is not oppressive when directors act bona fide and all shareholders get the same opportunity.

In a closely held private company, an allotment of further shares was not oppressive or illegal where the increase in authorised share capital was approved after notice, the offer was made equally to all existing shareholders, and each shareholder was given the opportunity to apply for the entitled shares, fewer shares, or additional shares. The Court treated the directors' conduct as subject to a higher fiduciary standard but held that incidental benefit to the majority does not by itself establish oppression if the power is exercised bona fide and for the company's benefit. On the facts, the challenge failed because the shareholders knew of the proposed increase and chose not to participate, rather than being excluded by discriminatory conduct.

---

---

Issues: Whether the allotment of additional shares in a closely held private company was oppressive or illegal, and whether the direction to allot shares to all existing shareholders with an opportunity to apply for additional shares could be sustained.

Analysis: The authorised share capital was increased by the shareholders after notice, and the Board's resolution to invite applications was understood as becoming operative only after such increase. The offer was extended to all existing shareholders on an equal basis, with the option to apply for the entitled shares, fewer shares, or additional shares. The respondents were found to have had knowledge of the proposed increase and to have chosen not to apply. In a private company, the directors' conduct is judged on a higher fiduciary standard, but a transaction is not oppressive merely because the majority benefits incidentally, so long as the power is exercised bona fide and for the company's benefit. On the facts, the Court found no unfairness or illegality in the manner of allotment, and distinguished the case from situations where shares are issued solely to consolidate control.

Conclusion: The challenge to the allotment failed; the direction requiring allotment of shares in the impugned manner was set aside.

Ratio Decidendi: In a closely held private company, an allotment of further shares is not oppressive if the offer is made equally to all existing shareholders, the directors act bona fide for the company's benefit, and the change in shareholding results from some shareholders declining to participate rather than from discriminatory conduct.

---