Minority Shareholder Protection: Derivative Claims and Legal Challenges
Classified in Law & Jurisprudence
Written on in
English with a size of 2.17 KB
Traditional Doctrine and Challenges
A minority shareholder can raise a claim if they believe they have been mistreated by the majority shareholders. Traditionally, the company would bring a claim on behalf of the minority shareholder if the allegations involved a corporate wrong, such as fraud or control by the wrongdoer. However, this approach presented challenges:
- Difficult to establish proof beyond a reasonable doubt.
- Obtaining testimony from company employees against the majority shareholder was impractical.
Statutory Derivative Claims under the Companies Act 2006
Due to the limitations of the traditional doctrine, the Companies Act 2006 introduced statutory derivative claims under sections 260 and 263. Section 260 defines a derivative claim,... Continue reading "Minority Shareholder Protection: Derivative Claims and Legal Challenges" »