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Minority shareholder fails to prove prejudicial treatment

Posted: 1st May 2014   In: Dispute Resolution, Corporate Commercial

However, there has to be evidence of unlawful behaviour as opposed to the majority shareholders simply conducting business in a way contrary to the wishes of the minority.

A recent case before the High Court involved a businessman who was a minority shareholder in an aviation company. He claimed that he had bought his shares after being assured that he would become the company’s sole supplier of aircraft. 

However, he then found that the company continued to buy aircraft from other suppliers.

He took legal action saying this amounted to unfair prejudice to his interests and was contrary to company law.

However, the court was not satisfied that an exclusive arrangement had been agreed as the minority shareholder alleged. It was more likely that he had bought shares in the hope that he would then be able to secure an exclusive deal. There was no evidence to suggest that such an arrangement had been promised or agreed.

In any case, any prejudice he might have suffered was not unfair as the other shareholders had offered him the opportunity to realise his shares at a fair price.

Please contact Neil O'Callaghan if you would like more information about the issues raised in this article or any aspect of company law.

Posted by: Neil O'Callaghan
Dispute Resolution
Luton Office