What is the ratio in Howard Smith v Ampol Petroleum?

Directors must exercise their powers for the purposes for which they were conferred. They cannot issue shares primarily to affect control of the company rather than to raise capital.

What did the court decide in Howard Smith v Ampol Petroleum?

The Privy Council ruled the share issue was invalid because it was made for the improper purpose of defeating a takeover rather than raising capital.

Why is Howard Smith v Ampol Petroleum important for company law?

It established the fundamental 'proper purpose' doctrine that limits directors' powers and protects shareholders from manipulation of corporate control structures.

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