Butt v Kelson

Butt v Kelson [1952] Ch 197 is a UK company law and English trusts law case concerning the right of a beneficiary to direct its trustees to exercise votes on company shares that the trust possesses.

He wanted to inspect all the documents which came into the directors' possession, and claimed to be able to do so by virtue of his large beneficial interest.

Romer LJ held that if Mr Arthur Butt wished to see the company documents, made a proper case for it, and was not met by any objection of other beneficiaries, he should be allowed.

[...] What I think is the true way of looking at the matter is that which was presented to this court by Sir Lynn Ungoed-Thomas, that is that the beneficiaries are entitled to be treated as though they were the registered shareholders in respect of trust shares, with the advantages and disadvantages (for example, restrictions imposed by the articles) which are involved in that position, and that they can compel the trustee directors if necessary to use their votes as the beneficiaries, or as the court, if the beneficiaries themselves are not in agreement, think proper, even to the extent of altering the articles of association if the trust shares carry votes sufficient for that purpose.

In the present case, the trust holding gives complete control over the management of the company, and the sort of way in which I approach the plaintiff's right in this matter is this, that if he, firstly, specifies the documents of the company which he wishes to see; secondly, makes out a proper case for seeing them, and, thirdly, is not met by any valid objection by the other beneficiaries or by the directors from the point of view of the company, then the directors should give inspection, not because they can be compelled to do so as directors, but as a short circuit, if one may so describe it, to an order compelling them to use their voting powers so as to bring about what the plaintiff desires to achieve.Evershed MR and Birkett LJ concurred.