LexisNexis UK. Minority Shareholders: Law, Practice and Procedure

Transcription

1 Minority Shareholders: Law, Practice and Procedure Second editìon By Vìctorjoffe QC, LLB, MA (Cantab) of thè Middle Temple, Barrister of Serie Court, Lincoln's Inn Attorney, New York State Bar Barrister of thè Eastern Caribbean Supreme Court (Anguilla Circuit) CEDR Accredited Mediator With David Drake, BCL, MA (Oxon) of thè Inner Temple, Barrister of Serie Court, Lincoln's Inn and Giles Richardson, BCL, MA (Oxon) of thè Inner Temple, Barrister of Serie Court, Lincoln's Inn LexisNexis UK

2 Contents Foreword v Preface vii Table ofstatutes xv Table ofstatutory instruments Table ofcases xxi xix Chapter 1 Derivative claims 1 Personal rights of thè shareholder and rights of thè company 1 Control of litigation in thè name of thè company 2 Derivative claims and thè rule in Foss v Harbottle 3 Applicability of thè rule in Foss v Harbottle 4 Examples of cases falling within thè rule 5 Limitations and exceptions to thè rule in Foss v Harbottle 5 Limitations on thè right to proceed by way of derivative claim 17 Procedure 28 Using thè CA 1985, s 461(2)(c) to bring a derivative claim 40 Relationship between personal claim and derivative claim 40 The no reflective loss principle 41 Applicability of thè no reflective loss principle 52 Limite to thè no reflective loss principle 58 Human rights aspects 64 Striking out on thè basis of thè no reflective loss principle 65 Procedural considerations where shareholder has personal and derivative claims 66 ix

3 Chapter 2 Personal claims 68 Nature of personal claims 68 The statutory contract 69 Objections to alterations to thè articles 80 Enforcement of directors' duties 90 Ultra vires transactions 95 Shareholders' agreements 95 Procedure 98 Representative claims 98 Derivative claims and personal claims 100 Chapter 3 Rights conferred on shareholders by thè Companies Act Alteration of thè memorandum of association 101 Class rights 102 Financial assistance by a company for acquisition of ite own shares 110 Meetings of thè company 111 Inspection of registers and documents 115 Rectification of thè register of members 116 Takeover offers under thè CA 1985, Pt XIIIA 124 Procedure 131 Chapter 4 Just and equitable winding up 135 Introduction 135 Who may petition 135 When may contributories petition? 137 Scope of thè remedy 141 The relationship between 'just and equitable winding up' and 'unfair prejudice' 144 Cases where thè remedy is available 146 Exclusion of thè just and equitable regime 153 Forcing a winding up 153 Circumstances in which a winding up will not be granted 154 The existence of an alternative remedy 155 Procedure 162

4 Chapter 5 Unfair prejudice: thè statutory remedy 173 Introduction 173 Introduction: thè statutory provisions 173 The meaning of 'member': who may petition 175 The meaning of 'company': organisations in respect of which thè remedy may be granted 178 The company's affairs 178 The time of occurrence of thè complaints made in thè petition 187 The meaning of 'interests' 189 The meaning of 'unfairly prejudicial' 194 Breach of directors' fiduciary duties and thè relationship of derivative actions to s Examples of unfairly prejudicial conduct 217 The effect on thè petition of thè petitioner's conduct 236 Offers for thè purchase of thè petitioner's shares 238 The striking out of petitions prior to trial 242 Remedies 247 Chapter 6 Petitions under thè Companies Act 1985, s 459: procedure 269 Letter/offer before action 269 Disclosure before presentatdon of petition 270 Parties to thè petition 271 Form of petition 272 Presentation of thè petition 274 Fixing thè return day 274 Service 274 Return day and directions for thè further conduct of thè petition 275 Disclosure 277 Amendment of petition and statements of case 280 CPR Pt 20 claims 280 Applications for interini relief and summary judgment 281 Case management 281 Split trial 286 Delay and procedural default 286 XI

5 CPR Pt 36 offers 292 Hearing of thè petition 296 Order on thè petition 296 Funding of thè costs of thè proceedings 297 Appeals 303 Chapter 7 Taxation aspects of minority shareholder remedies 315 The nature of thè problem 315 Capital gains tax 316 Income tax 323 Corporation tax 324 Distributdon on winding up 326 Share sale by minority shareholder 326 Payment of dividend 328 Demerger 328 Stamp duty 328 The minority shareholder's cause of action 328 Appendix 1 Forms and precedents Derivative claims: claim forni and particulars of claim Application for permission to continue and for costs indemnity in derivative claim Witness statement in support of application for permission to continue derivative claim and for coste indemnity Order for permission to continue derivative claim and for costs indemnity Final order in derivative claim Personal claims: claim form and particulars of claim Claim for rectification of share register Petition for winding up on thè just and equitable ground Directions order in petition for just and equitable winding up Order for trial for preliminary issue in petition for just and equitable winding up Final order for winding up Final order dismissing petition Letter before action in unfair prejudice case 376

6 14. Petition for relief under thè Companies Act 1985, s Points of defence Directions order in petition for relief under thè Companies Act 1985, s Application for injunction Witness statement in support of application for injunction Injunction restraining use of company funds for purposes of defence of individuai respondents Final order Letter of offer to minority shareholders Expert's report on value of shares Appellanti Notice Shareholders' agreement for minority protection Article permitting shareholders to transfer shares at non-discounted valuation 436 Appendix 2 Statutory and other materials 439 Companies Act 1985, ss 4-6, 9, 14, 16, 22, 35, 125, 127, 151, F, 303, 356, 359, 369, 378, 380, C, Insolvency Act 1986, ss 76, 79, 117, 122, 124, 125, 127, 129, Companies (Unfair Prejudice Applications) Proceedings Rules 1986, SI 1986/ Insolvency Rules 1986, SI 1986/1925, rr 4.11, 4.16, 4.17, 4.20^.24, 7.51, 12.11, 12.12, Civil Procedure Rules 1998, 3.1, 3.4, 7.3, 7.5, Pt 8, 19.2, 19.6, 19.9, 24.2, 24.3, 36.1, 36.2, 36.5, , , Practice Direction: Applications under thè Companies Act 1985, Part VII of thè Financial Services and Markets Act 2000 and thè Insurance Companies Act Index 509 XIII