Flashcards in Lecture 12 - Membership of Ltd Deck (20):
Legal ownership whole/ part shareholding in company. Evidenced by necessary entry in Register of Members
Who can become member?
Anyone with legal capacity to enter contract can become member. No upper limit.
Termination of membership
Legally effective only when name owner removed from Register usually due to:
- Transfer of shares
- Death of member
- Redemption of redeemable shares
- Dissolution of company
Register of members contains (4)
- Names and addresses of members
- Number and types of shares
- Amounts paid up for shares
- Dates of becoming and ceasing to be a member
Must be kept up to date by company.
Shares in private company..
Very difficult to value, may not have finite value
Rule/ Decisions of majority shareholders
Usually prevail. They have put in most money/ subject to most risk. Regardless wishes of minority.
Case for minority/ majority shareholders
Foss v Harbottle 1843 > Victoria park Manchester. Majority shareholders wanted to sell for fraction value. Court upheld views majority.
General rule in majority vs minority (3)
- Company is proper claimant (not individual shareholder)
- Doesn't apply to disputes between shareholders amongst themselves
- Applies without exception where general meeting has power to and does permit act complained of
Exceptions to rule (4)
- Where acts complained of are illegal/ ultra vires (outside power company)
- Where resolutions passed through trickery/ misuse proper procedures/ fraud
- If negligent AND one or more majority interests profit
- Majority cannot vote to pass resolution to forfeit rights minority in favour majority (Cook v Deeks 1910).
Derivative actions CA 2006
New statutory procedure that allows shareholder to bring claim on behalf company for wrong done to company by directors/ others. But must obtain permission from court to continue with claim.
Derivative Claim case
Franbar Holdings Ltd v Patel 2008 > court refused permission continue with claim
Unfair prejudice CA 2006
When company's affairs are being conducted in manner that is unfairly prejudicial to shareholders generally or to some
Unfair prejudice case
Cumana Ltd 1986 > Court will outlaw acts complained of if sufficiently unfair
Court actions available to minorities (4)
- Wind up company
- Make regulations for future conduct
- Injuction against acts complained of
- Order purchase of minority shares by majority/ company
Winding up company (liquidation)
Jurisdiction under The Insolvency Act 1986 - drastic step.
Case of winding up company (2)
May be appropriate 'quasi-partnerships' eg Westbourne Galleries Ltd 1972. Or where personal relationships paramount eg Jesner v Jarrad 1992.
Injunct against acts complained of
Stop/ prevent acts eg Harmer Ltd 1958 > stamp collecting Grandad.
Order of purchase minority shares by majority/ company
Mechanism for valuation shares must be comprehensive and binding on both sides
Deadlock and motives
When voting rights are equal, and there are opposing views on policy and no casting vote.