Privy Council confirms shareholders have a personal claim against a company for improper exercises of power
The Judicial Committee of the Privy Council has handed down a landmark decision confirming the rights of shareholders, including minority shareholders, to prevent improper exercises of power and oppression by a company.
The court confirmed that a shareholder has a personal claim against a company when its directors exercise their powers for an improper purpose.
Furthermore, the Board found that such a claim may be brought by a minority shareholder in circumstances where the directors have allotted shares for the improper purpose of diluting that shareholder's voting power, so facilitating a takeover of the company.
The decision confirms a shareholder's ability to bring a personal claim against the company for declarations or injunctions to prevent conduct in breach of a company's articles of association, without the need for a derivative action.
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