Minority Shareholders: Applicability Of unfair Prejudice
Is minority shareholder completely powerless?
A minority shareholder is not completely powerless. There are always provisions included in the Companies Acts that influence a minority shareholder to restrain the excesses of the majority. Nevertheless, these provisions are not frequently used against majority shareholders determined to perform their plans. In such situations, the minority shareholder will have to seek protection and relief from the court. Therefore, a statutory remedy is provided for shareholders in the situation where an unfairly prejudicial conduct of the affairs of a company has occurred. Initially, the courts were reluctant to interfere in the decisions of the management since the unfair prejudice remedy previously, had a restrictive meaning. However, after the statutory changes, aiming at the removal of these restrictions, both the law and the courts are more in favour of providing relief towards minority shareholders through the unfair prejudice remedy, which is considered as being a major source of relief and protection for the minorities.
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