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Shareholders and Minority Protection (Shareholder Decisions (Ordinary…
Shareholders and Minority Protection
Shareholder Decisions
Ordinary Resolution
Special Resolution
Shareholders with >50% or >75% control have significant power
Minority Protection
Actions and Claims
Derivative
Company wronged and cannot act to right the wrong
Representative
Claim on behalf of all shareholders suffering a loss
Personal
Rights as a member infringed
Statutory Derivative Claim
Companies Act 2006
Directors' negligence, breach of trust, breach of duty, unfair prejudice, fraud
Permission to pursue with claim required from court
Examples of Fraud
Expropriation of the company's property
Reduction in capital to harm specific shareholders
Act to benefit the majority at the company's expense
Unfair Prejudice
Company affairs conducted in a way that unfairly adversely affects the interests of the members
O'Neill v Phillips (1999)
Established member relationship considered
Fairness tested against established equitable principles
Shareholders agreement and articles interpreted in line with equitable principles
Exercise of power contrary to what was agreed
Majority should use powers in good faith
Upholding what minority shareholders expect to happen
Not unfairly prejudicial if a reasonable share repurchase price is offered
Relief from unfair prejudice
Any actions the court sees fit
Regulate future affairs
Restrain company from certain prejudicial actions
Authorise the company to make a cliam
Order purchase of minority shares at a fair price