1. SHAREHOLDERS

2. Share holder means a person whose name is in the share register Or
Who is a Shareholder?
Share holder means a person whose name is in the share register Or
Who is entitled to have the name in the share register.

3. Rights / Powers of a Shareholder
The Shs can enjoy all rights and powers
&
be subject to all duties and obligations under the CA.

4. Exercise of Powers of a Shareholder
Sec 90- Powers of a shareholder can be exercised only
-at a meeting of shareholders or
By a resolution in liue of meetings (Sec 144)
Sec 91- a power reserved to shareholders may be exercised by an ordinary resolution (unless otherwise provided by this Act or in the articles of a company)
So, powers of a SH can be exercised by
- An ordinary resolution
A special resolution – Sec 92

5. Liability of Shareholders
Liability is limited as provided for in CA and A of A
Not bound by amended Articles or requirement to purchase shares where it would increase the liability unless agreed to in writing.
Former holder not liable for calls unless held shares 12 months prior to liquidation
If the shares are not fully paid balance due will remain liable.

6. Share Register – Sec 123
Every company which has issued shares should maintain a share register that records the shares issued by the company.
Trusts should not be entered in the share register (S 129)
The share register must be kept at the registered office (S116)
Sec 126- Every company having more than fifty shareholders should keep an index of the names of the shareholders of the company

7. Majority Rule and Minority Protection
G. A. Chathuri Sajeevi

8. Majority Rule / Rule in Foss v. Harbottle

9. Minority Protection
Statutory protection
Case law

10. Oppression and Mismanagement
Oppression – Sec 224
Affairs of the co. are conducted in an oppressive manner
SH apply to court
Court makes an order

11. What type of conduct amount to opression?
Oppression and Mismanagement Contd….
What type of conduct amount to opression?
Scottish Co-op wholesale society v. meyer
Eg:
Re A Noble and Sons Ltd
Re Harmer

12. Mismanagement SH apply to court Court makes an order
Mismanagement – Sec 225
Mismanagement
SH apply to court
Court makes an order

13. Who can make an application?
a shareholder or shareholders, during the six months prior to the making of the application-
(a) constituted not less than 5%of the total number of shareholders; or
(b) held shares which together carried not less than 5%of the voting rights at a general meeting of the company.
Sec 232 – who is a shareholder under section
Joint Shareholders
Application

14. Ramya Apparels Ltd v. Hi-Q Fashions Ltd
Case law
Unipack Ltd and Another v. Amarasena
Ratnam and Others v. Jayathilake
Ramya Apparels Ltd v. Hi-Q Fashions Ltd

15. Powers of the court on application for oppression and mismanagement
Sec the court can provide for appropriate remedies
Sec Where the court makes an alteration in the articles of the company, then, the company should not have power to make any alteration in the articles which is inconsistent with the order.
Sec where a court is of the opinion that the winding up proceedings in respect of a company, would be prejudicial to the interests of a shareholder of the company, the court can act as if an application had been made to the court under sec 224 or 225.

16. Provisions to limit action under Sec 224 & 225
Sec 226 (4) - Where the SH has made an application vexatiously or without reason or probable cause,
the court can -
award costs against such shareholder/s
direct that such shareholder/s be disqualified from being appointed as a director/ agent/ secretary/ manager of the company for a period not exceeding five years from the date of the order
direct that the shareholder/s should not have the right to convene or requisition any meeting of the company or
have the right to be present in person or by proxy at any meeting of the company within the aforesaid period, or
to vote upon a show of hands or at a poll by person or by proxy at such meeting.

17. Restraining Orders – Sec 223
conduct that would contravene the articles of the company or any provision of this Act An application can be made by – (a) the company; or (b) a director or © shareholder of the company. court can make an order restraining conduct An order can not be made under this section in relation to a conduct or a course of conduct that has been completed.

18. Derivative Action Sec 234
Application of a shareholder or director of a company
Court grant leave to that shareholder or director to-
(a) bring proceedings in the name and on behalf of the company or any subsidiary of that company; or
(b) intervene in proceedings to which the company or any subsidiary is a party, for the purpose of continuing, defending, or discontinuing the proceedings on behalf of the company or subsidiary, as the case may be.
There are several matters the court should consider in deciding whether to grant leave.
Leave to bring proceedings or intervene in proceedings can be granted only if the court is satisfied.

19. Derivative Action Contd…
Where the company or subsidiary does not intend to bring, diligently continue, defend or discontinue the proceedings (S234 (3)(a))
Birch v. Sullivan
Decision not to sue can take 3 forms
A decision by the directors not to sue
Decision by majority of SHs not to sue
A decision by members to retify wrongful action
Ingre v. Maxwell / Barett v. Duckett
Cost of the proceedings
Powers of the court
Compromises

20. Amarasekere v.
Mitsui And Company Ltd, and Others

21. Common Law (1) Fraud on the minority Burland v. Carle
Fraud- There are 3 aspects of fraud
Appropriation of corporate property
Negligence
Abuse of power
Prudential Assurance v. Newman
(2) Wrongdoer Control
“Where persons against whom the relief is sought themselves hold and control the majority of the shares and will not permit an action to be brought in the name of the co., courts allow SHs to bring an action in order to give remedy for a wrong which would otherwise escape redress.”

22. Minority buy-out rights
Sec 93- Where a shareholder has voted against a Special Resolution regarding
(a) alteration of the company's articles
(b) approving a major transaction
(c) approving an amalgamation of the company Or
where the resolution under Sec 144 was passed, the shareholder did not sign the resolution in respect of the shares registered in the shareholder's name
that shareholder should be entitled to require the company to purchase his shares.

23. Interest Group and Alteration of Shareholder Rights
As per Sec 99 - A company should not take any action that would affect the rights attached to shares, unless that action has been approved by a special resolution of each interest group. "interest group" in relation to any action or proposal affecting rights attached to shares, means a group of shareholders- (a) whose affected rights are identical; and (b) whose rights are affected by the action or proposal in the same way