Shareholder Disputes – Minority Shareholder Claims

By James Gould on

Picture the scene; you are a shareholder in a company.

Shareholders: A falling out?

You do not hold a directorship in the company and are not on good terms with your fellow shareholders. You believe that your shareholding is being prejudiced; decisions are taken that you disapprove of, you are always outvoted at general meetings and it appears that through creative accounting you are being denied your share of the company’s profits.

Unfortunately the above is an all too frequent truth, particularly in small businesses where the founding members have fallen out with each other.

The Companies Act 2006

Happily there is a legal solution for our unfortunate shareholder; they can bring a claim under sections 994-996 of the Companies Act 2006.

These claims are commonly known as minority shareholder claims, although in truth a true minority shareholding is not required; many such claims are brought by equal shareholders in companies run as quasi partnerships where one shareholder has been frozen out by the other.

Shareholder claims are personal actions, they are brought by one shareholder against another, and therefore the company most remain neutral in these disputes.

The purpose of the claim is to obtain a declaration of prejudice from the Court and appropriate relief. This relief will often take the form of an order for the sale of the prejudiced shareholding, an order that the shareholder may pursue a derivative claim, or where the Court considers it the most equitable approach, an order the company is wound up.

Get in touch

Are you a shareholder and feel that your shareholding has been prejudiced? Or are you subject to a shareholder prejudice claim? If so our experienced commercial solicitors in LeedsWakefieldBradfordManchester and London in 0113 299 4431.