6.1 Internal Disputes: Removing Ds + Actions for Minority Flashcards
What if GM notice already sent for giving notice of placing 168 OR on agenda (in terms of special notice)
Use alternative method, e.g. place in newspaper
What must Ds do if Ms forced to call GM under 305
Reimburse Ms for reasonable expenses incurred
What does court consider when giving permission to continue claim under 260 (two categories)
Some cases when court must refuse, and others when it can refuse
Examples of unfair prejudice for 994
Excessive remuneration to Ds, or non-payment of dividends
Two things to consider if D = M for 168 OR
If D has weighted voting rights and if AoA has provisions to transfer shareholding of outgoing D
994 applies to what
Unfair prejudice claim
Foss v Harbottle ratio
C = proper claimant for act/omission by D
Example of what is NOT unfair prejudice under 994
Disagreeing over company policy
What case shows Ds can refuse to place 168 OR on agenda despite giving special notice
Pedley
260 applies to what
Derivative claim
When can Ms not include text of proposed text under 303
If OR would e.g. be defamatory
What case shows dismissal can be unfair prejudice (if legit expectation in continuing to be employed)
Re a Company
What action by M is brought on behalf of C
Derivative
How many stages to 260
2
What case does 260 represent an exception to
Foss v Harbottle
Two possible actions by minority M
Derivative claim and unfair prejudice
Is it necessary to prove breach of AoA for 994 claim?
No
Max time to hold GM under 305
Three months from receipt of 303 by Ds
When must GM be held under 303
Within 28 days of date of notice convening the meeting
What is the effect of breaching SA, even if complying w/ CA
Sue for BoC
Notice period to call GM under 305
14 clear days’ notice
What might D be entitled to if he is removed and = BoC
Compensation as damages
Pedley shows what
Ds can refuse to place 168 OR on agenda despite having special notice
Three rights of D under 169
C forwards copy, right to be heard, and make written reps
What is the clause called which gives D weighted voting rights
Bushell v Faith
When might 994 action not be advisable
Minority M cannot afford to purchase other party’s shares, or does not want to sell shares
What case shows that veto provisions in SA can be contrary to CA
Russell v Northern Bank
Days for special notice for 168
28 clear days
What is a common order if 994 claim successful
One party to buy out other’s shares
Manner of giving notice of putting 168 OR on GM agenda
Give to all Ms at same time and manner as for GM, unless impractical
What means that if member rights are infringed, C can be sued for damages (CA provision)
33
What kind of res to remove Ds by Ms
OR
What test does court use for 994
Objective
Two things to bear in mind when considering if 168 OR will be passed
D likely to demand poll vote if also M, and spouses likely to vote the same way
Can WR be used for 168?
No
What is different about notice for removing D by Ms?
Ms must give special notice
Manner of request under 303
Electronic or hard copy + authenticated doc
Two things Ms can do if Ds refuse to place 168 OR on GM agenda (provisions)
303 and 305
When may it be impractical to give notice of 168 OR at same time as for GM
If GM already sent
Does it matter for 260 if CoA arose before M became M
No
What is usually served w/ 312 special notice and why
303 to speed up process
On what day(s) can Ms proceed to 305 for Ds failure under 303
Not called by 22nd day, or not held by 29th
Requirements to call GM under 305
All Ms who submitted 303 or more than 50% of the same
Can Ms include text of proposed text when requesting under 303?
Yes
When might M apply for court order under 994
C affairs or act/omission prejudicial to some or all M’s interest
33 CA ‘06 says what
AoA = C between Ms and between Ms and C
Section in CA on derivative claim
260
What gives a direct claim by one M against another
SA
Do veto provisions in SA remove statutory right to pass X matter w/ statutory res?
No
When is 260 claim not permitted - court permission CANNOT be given
If action ratified under 239
Why might M have legit expectation to continue to be employed
If risked capital
What action by M is brought by M himself, not on behalf of C
Unfair prejudice
Can Ds be removed by fellow Ds
Only if AoA specifically allows for it
Part of CA on unfair prejudice claim
994
Preventing M involvement in management of company may = unfair prejudice (case)
Ebrahimi
Re a Company ratio
Shows dismissal can be unfair prejudice (if legit expectation in continuing to be employed)
2 stages to 260 claim
Obtain court permission to continue claim + court has particular regard to M views
What happens if one person abstains + there is a poll vote
Exclude his shareholding from consideration
Where are Ds rights in the case of 168 OR + special notice given
169
Min delay if 305 used by Ms
37 days
Bushell v Faith does what
Clause in AoA gives D weighted voting rights
Why is D likely to demand poll vote for 168 OR
To rely on his shareholding
When must GM be called under 303
Within 21 days
Section of CA on special notice for 168
312
Max delay if 303 used by Ds complying
49 days
What is 260 most commonly brought for
Breach of 170 - 177 duties
Two ways minority shareholders can defeat majority rule (other than 260 + 994)
Membership rights under 33 and SAs
Two things generally BoD can do on receipt of 168 + 312
Place OR on GM agenda, or refuse to do so
What is preferable if Ds wish to delay removal of D for as long as possible - comply w/ 303 or force 305?
303
Requirements to serve 303 notice
5% of stare capital
What case determined C = proper claimant if D has breached duty, or trust, or negligence etc.
Foss v Harbottle
Why is short notice under 305 unlikely to be successful
Requires 90% NV to be in agreement
Ebrahimi ratio
Preventing M involvement in management of company may = unfair prejudice
Period notice for BoD to place OR under 168 on agenda
14 clear days before GM
What M views does court have regard to for second stage of 260 test
Ms w/ no personal interest
Is there a need for shareholder approval if D removed + entitled to compensation as damages for BoC
No
What section prohibits use of WR for 168
288
Example of provision in SA which protects minority shareholder
Veto provision
Which one does 360 apply to - 303 or 305 - and why
305 bc Ms to call in ‘same manner, as nearly as possible’, as Ds would under 307
