Law

Oppression, oppression… of minority shareholders.

March 21, 2021 Paul Brennan
Law
Oppression, oppression… of minority shareholders.
Chapters
Law
Oppression, oppression… of minority shareholders.
Mar 21, 2021
Paul Brennan

What happens when the  other shareholders gang up on you.

© Paul Brennan 2008-2018. All rights Reserved.

Extract from "The Art of War, Peace & Palaver: The Contentious Guide to Legal Disputes" 


Brennans solicitors
Lawyers - commercial, property, IP, litigation, Will disputes

Show Notes Transcript

What happens when the  other shareholders gang up on you.

© Paul Brennan 2008-2018. All rights Reserved.

Extract from "The Art of War, Peace & Palaver: The Contentious Guide to Legal Disputes" 


Brennans solicitors
Lawyers - commercial, property, IP, litigation, Will disputes

Management getting you down?  Wait a minute, you are management.

You are a band of four equals growing a company to sell it for a killing.

Initially, your conservative, systematic approach mixes well with their knockabout, cavalier manner. 

However, as the company becomes more successful, the other three shareholders increasingly play the three musketeers as if you were one of the Cardinal’s men.  Voting in the board meetings becomes three to one and not one for all.

They decide to make your life a misery so that you leave without insisting on a full 25% share.  They deliberately criticize or ignore everything you say, treating you like an employee and starving you of information to upset you, despite you being a director. 

This strategy can be very successful Sun Tzu advised that it was better to crush your enemy’s will without fighting.

You tell your lawyer that it is like having a nagging spouse who does not listen to what you say and spends money like water without consulting you.  Many lawyers will know exactly what you mean. 

However, in shareholder “splits” there is no “no fault” divorce.  If it is just a matter of a lack of confidence and trust between shareholders, the Court may leave you all to stew or pull the plug putting the company into liquidation.

But, here you are being bullied and courts hate bullies as much as anybody, unless of course the bully is a judge and then that seems to be alright.   

Your lawyer will tell you that you are an oppressed minority shareholder subject to unfairly prejudicial conduct.  You must do what the majority say but you are entitled to participate as you were supposed to be an equal. Basically, it is a breach of contract. 

The most common order is for the remaining shareholders to buy your shares at a market price.  An alternative is for the company to be wound up and everyone loses.  

© Paul Brennan 2008-2018. All rights Reserved.

Extract from "The Art of War, Peace & Palaver: The Contentious Guide to Legal Disputes"