Majority Rule

I’m a minority shareholder in a private limited company and am being left in the dark when it comes to pretty fundamental decisions. What should I do?

Most Northern Irish companies only have a small number of shareholders, usually 2 or 3. It’s often the case that these shareholders are also the people who manage and run it on a day to day basis. In reality these companies are run more like a partnerships than a large corporate entity and are often called quasi partnerships.

‘Majority rule’, is an established principle of company law whereby the majority of the shareholders hold the decision making power of the company. Sometimes this dominant position leads to an oppression of the minority shareholders interest – this may be in the form of blocking minority shareholders from the decision making processes.

The Companies Act 2006 offers an olive branch to those minority shareholders who find themselves in such a position. This piece of legislation affords broad relief to a minority shareholder who can show that they have been treated both unfairly and prejudicially as a shareholder. The Court can award the majority shareholders with a share purchase order, as well as other forms of relief. Quality advice, early, is crucial in these situations to ensure your financial interests are not eroded beyond repair.

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While great care has been taken in the preparation of the content of this article, it does not purport to be a comprehensive statement of the relevant law and full professional advice should be taken before any action is taken in reliance on any item covered.