According to the Companies Act Chapter 81:01, a “shareholder”, in relation to a company, means a person described in section 107(1); which states that a shareholder is: (a) a person who is a member of the company under section 349(3); (b) The personal representative of a deceased shareholder and the trustee in bankruptcy of a bankrupt shareholder; (c) a person in whose favour a transfer of shares has been executed and delivered but whose name has not been entered in the register of members of the company or, if two or more such transfers have been executed and delivered, the person in whose favour the most recent transfer has been made, provided that in the case of a company other than a public company in respect of the persons mentioned in paragraphs (b) and (c).
“The majority usually dictates the action of a company and the minority is usually bound by the decisions of the majority (Foss v Harbottle (1843)). Problems may arise where those in effective control of a company use their power in such a way as either to benefit themselves or to cause a detriment to the minority shareholders. In the light of such a possibility, the law has intervened to offer protection to minority shareholders.
The source of the protection may be considered in three areas: * Fraud on the minority: it has long established at common law that those controlling the majority of the shares are not to be allowed to use their position of control to perpetuate what is known as a fraud on the minority. In such circumstances, the individual shareholder will be able to take legal action in order to remedy their situation (Cook v Deeks (1916)); * Just and equitable winding up; * Unfairly prejudicial conduct: under s 459 of the CA, any member may petition the court for an order on the grounds that the affairs of the company are being conducted in a way that is unfairly prejudicial to the interests of some of the members.
Section 461 gives the court general discretion as to any order it makes to remedy the situation (Re London School of Electronics (1986); Re Bird Precision Bellows Ltd (1984); Re Sam Weller and Sons Ltd (1990)). In addition to the above remedies, the Secretary of State has the power under s 431 of the CA to appoint inspectors to investigate the affairs of a company. The sort of conduct which is likely to be held unfairly prejudicial by the courts is: * exclusion from management in circumstances where there is a (legitimate) expectation of participation; * the diversion of business to another company in which the majority shareholder holds an interest; * the awarding by the majority shareholder to himself of excessive financial benefits.
* An act or omission of a company or any of its affiliates carried out or conducted in a manner * The business or affairs of the company that have carried on or been conducted in a manner * The powers of the directors of a company that have been exercised in a manner that is oppressive or unfairly prejudicial to, or that unfairly disregards the interests of any shareholder… The remedies available to a minority shareholder following a successful petition according to section 242 (3) are: a) Making an order restraining the oppressive conduct b) Appointing a receiver or receiver-manager, c) Regulating the company’s affairs by amending its articles or by-laws, or creating or amending a unanimous shareholder agreement, d) Directing an issue or exchange of shares or debentures, e) Appointing directors in place of, or in addition to, all or any of the directors then in office, f) Directing a company to purchase shares or debenturesg)
Directing a company to pay to a shareholder or debenture holder any part of the moneys paid by him for his shares or debenture, h)- Varying or setting aside a transaction or contract to which a company is a party, and compensating the company or any other party to the transaction or contract, i) Requiring the company within a specific time to produce financial statements to the Court or an interested person j) Compensating an aggrieved person, k) Directing rectification of the company’s registers or other records, l) Winding up and dissolving the company m) Directing an investigation to be made, or n) Requiring the trial of any issue. References: 1. Laws of Trinidad and Tobago. Ministry of Legal Affairs https://www. ttbizlink. gov. tt/trade/tnt/cmn/pdf/Companies%20Act-81. 01. pdf 2. Routledge Cavendish. “Company Law” Lawcard Series, Business Law Pg 89-90. 3. Ashfords Solicitors , “Guide to Unfair Prejudice Against Shareholders” Last Modified Monday 8th February, 2010. Darte accessed:20th June, 2012 http://www. ashfords. co. uk/news/shareholders_disputes_guide