Shareholders who receive their shares as a gift but afterwards work in the business may become entitled to enforce equitable restraints upon the conduct of the majority shareholder. To succeed the applicant must show some detriment in their capacity as a member of the company, and not as a director, though a wrongful exclusion of a member from participation in the management of the company may amount to such.
A majority shareholder has no obligation to choose as a representative director the most suitable person for the position. A majority shareholder may appoint his friend or a person whom he might reasonably expect usually to vote in a certain way.
The mere subordination of the wishes of the minority by the exercise of the voting power of the majority is not of itself oppressive.
Jenkins LJ accepted a submission that: ‘If a person, relying on majority control in a point of voting power dispenses with the proper procedure for producing the result he desires to achieve, and simply insists on this or that being done or omitted, his conduct is oppressive because it deprived the minority of shareholders of their right as members of the company to have its affairs conducted in accordance with its articles of association’.
Judges:
Jenkins LJ
Citations:
[1959] 1 WLR 62, [1958] 3 All ER 689
Statutes:
Jurisdiction:
England and Wales
Cited by:
Cited – O’Neill and Another v Phillips and Others; In re a Company (No 00709 of 1992) HL 20-May-1999
The House considered a petition by a holder of 25 of the 100 issued shares in the company against the majority shareholder. The petitioner, an ex-employee, had been taken into management and then given his shares and permitted to take 50% of the . .
Cited – Arrow Nominees Inc, Blackledge (L) v Blackledge (G), Blackledge (M), Blackledge (GR and MM) ChD 21-Jan-2000
The claimants had begun proceedings claiming unfair prejudice by the defendants in the management of the business. The defendants sought to have the petition struck out saying that the claimants had used falsified documents to base their petition. . .
Lists of cited by and citing cases may be incomplete.
Company
Updated: 07 October 2022; Ref: scu.444675