Aveling Barford Ltd v Perion Ltd

Aveling Barford Ltd v Perion Ltd [1989] BCLC 626 is an English company law case concerning reduction of capital.

As the company did not have distributable reserves, the sale was in consequence an unlawful reduction of capital.

The law in relation to the transfer of assets at an undervalue has been clarified in CA 2006, and the amount of the distribution arising in consequence of a sale at undervalue is now determined in accordance with section 845.

Mr Lee owned and controlled both Aveling Barford Ltd and Perion Ltd. Aveling Barford owned a country house and 18 acres of land in Grantham, which it sold to Perion £350,000, rather than the £1,150,000 it had been valued for prospective mortgagees.

Hoffmann J held that it was a breach of the directors' fiduciary duty to sell the property at an undervalue.