Cosmetic Warriors Limited & Lush Cosmetics Limited v Andrew Gerrie [2017]

Cosmetic Warriors Limited & Lush Cosmetics Limited v Andrew Gerrie [2017] EWCA Civ 324 addressed the interpretation of Articles of Association in the context of a shareholder dispute involving share transfer provisions and company share valuation.

A prolonged shareholder dispute led to an 11% shareholder leaving the company, triggering share transfer provisions and the need for a Company Share Valuation. The Articles allowed the company to purchase the shares at an agreed price or fair value, determined by the median of two valuations certified by independent chartered accountants on a going concern basis.

The company contended that fair value should be discounted for a minority holding, reflecting the lack of control and marketability. It was argued that the Articles did not set an artificial value on shares, and the going concern basis referred to valuing the shares as part of the ongoing business.

The Court of Appeal ruled against the company's arguments. Fair value, as per the Articles, did not include a discount for a minority holding. The relevant transfer provisions did not distinguish between minority and majority shareholders. The Articles constituted a statutory contract, and its provisions prevailed over the company's interpretation. Despite a distinction in one part of the Articles, "person" was interpreted to include both individuals and body corporates.

Shareholders are reminded of the importance of understanding Articles of Association as a contractual agreement. The decision underscores the need for careful reading of Articles, as they define the rights and obligations of shareholders.

The case may be subject to further appeal, considering the Supreme Court's emphasis on interpreting contracts in a manner consistent with business common sense in Wood v Capital Insurance Services Ltd [2017].

Cosmetic Warriors v Andrew Gerrie highlights the significance of clear and precise drafting in Articles of Association, emphasising that they constitute a binding contractual framework for shareholders. The decision also reflects the courts' commitment to interpreting contracts in a manner aligned with commercial reasonableness.
Back to blog
UOLLB SQE Turbocharge

UOLLB SQE Turbocharge

Get ready for the SQE1 with high-performance SQE Study Guides developed by UOLLB and published by UOL Press to revolutionise your study method and exam strategy.

Turbocharge SQE Performance

UOL Case Bank

Upon joining, you become a valuable UOL student and gain instant access to over 2,100 essential case summaries. UOL Case Bank is constantly expanding.
Speed up your revision with us now👇

Subscribe Now

Where are our students from?

Council of Europe
Crown Prosecution Service
Baker Mckenzie 
Yale University
University of Chicago
Columbia University
New York University
University of Michigan 
INSEAD
University of London
University College London (UCL)
London School of Economics (LSE)
King’s College London (KCL)
Royal Holloway, University of London 
Birkbeck, University of London
SOAS, University of London
University of Manchester
University of Zurich
University of York
Brandeis University
University of Exeter
University of Sheffield
Boston University
University of Washington
University of Leeds
University of Law
University of Kent
University of Hull
Queen’s University Belfast
Toronto Metropolitan University
Hong Kong University of Science and Technology
University of Buckingham
ESSEC Business School

  • Criminal Practice

    Diagrams and Charts

    Our carefully designed diagrams and charts will guide you through complex legal issues.

  • Criminal Law

    Clear and Succinct Definitions

    Key concepts are concisely defined to help you understand legal topics quickly.

  • Property Law

    Statutory Provisions

    Statutory provisions are provided side by side with legal concepts to help you swiftly locate the relevant legislation.

  • Public Law

    Case Summaries

    We have summarised important cases for you so that you don't need to read long and boring cases.

  • Evidence

    Rules and Exceptions

    Rules and exceptions are clearly listed so that you know when a rule applies and when it doesn't.

  • Company Law

    Terminology

    Legal terms and key concepts are explained at the beginning of each chapter to help you learn efficiently.

  • Case Law

    Case law is provided side by side with legal concepts so that you know how legal principles and precedents were established.

  • Law Exam Guide

    Law Essay Guide

    You will learn essential law exam skills and essay writing techniques that are not taught in class.

  • Law Exam Guide

    Problem Question Guide

    We will show you how to answer problem questions step by step to achieve first-class results.

  • Conflict of Laws

    Structured Explanations

    Complex legal concepts are broken down into concise and digestible bullet point explanations.

  • Legal System and Method

    Legal Research

    You will learn legal research techniques with our study guide and become a proficient legal researcher.

  • Jurisprudence and Legal Theory

    Exam-focused

    All essential concepts, principles, and case law are included so that you can answer exam questions quickly.