What rights cant be enforced under articles even is included in articles
rights outside of capacity as member- personal capacity
who is a shareholder agreement (SHA) between? what are the advantage?
contract between some or all of the SH
SHA is kept private
what cant SHA restrict?
The statutory powers of the company, but it can be party to other provisions
what cant SHA restrict?
The statutory powers of the company, but it can be party to other provisions
What protection do SHAs afford SHs?
- rights of actions
- matters reserved in agreement e.g unanimous consent to remove D
- amending SH requires unanimous consent because they are contracts unlike AOA which require 75%
What rights so SHs have under CA 2006
5% or more- require board to hold GM under s303, require circulation of written statements regarding proposed resolutions to be considered at GM
10% or more- demand a poll vote
more than 25%- block a SR
50%- block OR
more than 50%- pass OR
75% pass- SR
90%- use the short notice procedure to call GM
What is a derivative claim?
who can Bring it against who?
claim brought by SH on behalf of company against D who or third party, or both who breached their duty.
Claim may be brought only in respect of a cause of action arising from an actual or proposed act or omission involving negligence, default, breach of duty or breach of trust by a director of the company
SH can bring claim about something which happened before they were SH, but a former SH cannot bring a claim
What are the two stages of bringing a derivative claim?
- Prima facie case- the member bust obtain the permission of the court to bring the claim, ones is on the member to make out a prima facie case.
- if the application is not dismissed at the first stage, the court will consider a particular criteria:
- particular regard to evidence before it as to the views of the members who have no personal interest, direct, or indirect in the matter.
This provision makes it harder of a single SH to bring a claim
under what circumstances will the court reject the application under stage 1?
- if someone acting in accordance to s 172 (the duty to promote success) would not bring the claim
- if company ratified the acts or gave permission to D
What if there is no absolute bar in stage one?
the court will consider:
- is the person acting in good faith
- will act likely be ratified?
s994 What is claim of unfair prejudice? who is it brought against?
A member can bring a personal action on the grounds that they company is being run in a way that is unfairly prejudicial to their interest as members generally of some members (includes act or omission)
the claim is brought against the company itself
what situations would give rise to a claim of unfair prejudice?
- granting excessive renumeration to directors
- directors dealing with associated persons
- non payment of dividends
What must the shareholders show? what is the test?
- company affairs conducted in a way which is unfairly prejudicial to their interest or
- some act or omission has unfairly prejudiced them
REASONABLE BY STANDER (OBJECTIVE)
Will negligent inept management equate to unfair prejudicial?
no, unless serious/ repeated which puts interest of minority SH at risk
Will disagreements on company policy equate to unfair prejudicial?
No
Will bad faith equate to unfair prejudicial?
no need to show bad faith for petition
Will breaches of the AOA equate to unfair prejudicial?
O’Neill v Philips
O’Neill v Philips: “a member will not ordinarily be entitled to complain of unfairness unless there has been some breach of the terms on which he agreed that the affairs of the company should be conducted… [However,] there will be cases in which equitable considerations make it unfair for those conducting the affairs to rely upon their strict legal powers”
Will breaches of the AOA equate to unfair prejudicial?
O’Neill v Philips
O’Neill v Philips: “a member will not ordinarily be entitled to complain of unfairness unless there has been some breach of the terms on which he agreed that the affairs of the company should be conducted… [However,] there will be cases in which equitable considerations make it unfair for those conducting the affairs to rely upon their strict legal powers”
are claimant conduct relevant?
relevant but no overhang requirement
Excessive renumeration
courts will take a wide view of the prejudice
are legitimate expectations considered?
Yes, in small companies.
What are the remedies for unfair prejudice?
The court has power to grant an order it thinks fit, this can include:
- regulation of future conduct
- orders requiring a company to do/ refrain from certain act
- share purchase order of petitioners shares
how will shared be values for purchase order?
court has discretion but:
- value in articles
- no discout
- valuation on the date of order
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