Hogg v Cramphorn Ltd [1967] Ch 254 is a famous UK company law case on director liability.
The Court held that corporate directors who dilute the value of the stock in order to prevent a hostile takeover (the poison pill) are breaching their fiduciary duty to the company.
Mr Baxter approached the board of directors of Cramphorn Ltd. to make a takeover offer for the company.
The directors (including Colonel Cramphorn who was managing director and chairman) believed that the takeover would be bad for the company, so they issued 5707 shares with ten votes each to the trustees of the employee’s welfare scheme (Cramphorn, an employee and the auditor).
The power to issue shares creates a fiduciary duty and must only be exercised in order to raise capital and not for any other purposes such as to prevent a takeover.