Minority shareholder Definition

GLOSSARY

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What does Minority shareholder mean?

Minority shareholders are usually members who hold less than 50% of the shares in a company that have voting rights attached, meaning that they cannot block ordinary resolutions or special resolutions or any other resolution that must be passed by a higher majority. Minority shareholders are therefore at risk of their views being unfairly disregarded.

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Exiting a joint venture—checklist

Exiting a joint venture—checklist This Checklist identifies the different routes to termination or exit from a joint venture (JV) and the considerations which apply depending on the exit path chosen. For guidance on responding to a JV dispute, see Practice Note: Joint venture disputes—how to respond. For further detailed guidance on terminating joint ventures in the context of a specially created or nominated joint venture company (JVC), see Practice Notes: • Termination—corporate joint ventures • Tax implications of operating and terminating a joint venture company • Corporate joint venture dispute—dealing with deadlock: initial considerations • Majority-minority joint venture dispute—a practical illustration Embarking on a JV relationship in the first instance usually involves considerable planning and effort on the part of the JV parties who have decided to partner one another for mutual gain (usually by sharing cost, resource and experience). You will need to consider the full implications of ending or exiting the JV, as to whether there are sufficiently good reasons for being prepared to see that investment lost...

Board composition—corporate governance guidelines

Board composition—corporate governance guidelines STOP PRESS: A new version of the UK Corporate Governance Code (UKCG Code) was issued on 22 January 2024 (2024 UKCG Code) and makes limited changes to the current version of the UKCG Code, which was issued in 2018 (2018 UKCG Code). The 2024 UKCG Code will apply to companies with accounting periods beginning on or after 1 January 2025 (with the exception of Provision 29 relating to the requirement for a board declaration in relation to internal controls, which will apply to accounting periods beginning on or after 1 January 2026). For further information, see News Analysis: UK Corporate Governance Code 2024 published—what’s changed?.. Quoted companies (other than investment companies) Source Recommendation Reference UK Listing Rules Companies listed in the equity shares (commercial companies) category should disclose in their annual report whether they meet the following board diversity targets relating to gender and ethnicity on a ‘comply or explain’ basis as at a chosen reference date within their accounting period:• at least 40% of...

Russian roulette—flowchart

Russian roulette—flowchart The Russian roulette procedure is frequently used to resolve deadlock because, even though drastic, it should be fair as between the shareholders and prevent one shareholder from unfairly manipulating the price payable for the shares. However, it may not be appropriate if there is significant financial disparity between the shareholders as one shareholder may be unable to buy the other shareholder’s shares at the price specified by that other shareholder. The procedure is started by one shareholder (the Server) offering to buy the other shareholder’s (the Recipient’s) shares or to sell its shares to the Recipient at a price per share specified by the Server. In a majority/minority joint venture, the minority shareholder will want either shareholder

Texas shoot out (sealed bids)—flowchart

Texas shoot out (sealed bids)—flowchart The Texas shoot out (sometimes called a Mexican shoot out, Tex Mex shoot out or sealed bids) procedure may be started by either shareholder (or the shareholder which did not cause the deadlock) serving notice on the other shareholder, requiring both shareholders to submit sealed bids for the shares of the other shareholder within a specified timescale. The shareholders will be obliged to complete a share transfer on the terms of the bid with the highest price per share. There are a number of variants to this procedure, including that the joint venture shareholders’ agreement may provide for bidding by auction. It would be more usual in a deadlock or 50:50 joint venture for either shareholder to be able to serve the notice starting the Texas shoot out procedure. In a majority/minority joint venture, the majority shareholder may prefer for only

Lithuania merger control

Lithuania merger control A conversation with Linas Petronaitis, senior associate in the Vilnius office of regional law firm Sorainen, on the key issues on merger control in Lithuania. NOTE–to see whether notification thresholds in Lithuania and throughout the world are met, see Where to Notify. 1. Have there been any recent developments regarding the Lithuanian merger control regime and are any updates/developments expected in the coming year? Are there any other ‘hot’ merger control issues in Lithuania? In 2023 and 2024, the ’hot’ topic of merger control is ‘gun-jumping’ (implementing a merger without clearance). 3 investigations into gun-jumping were opened in recent years. On 16 January 2023, the Competition Council opened a gun-jumping investigation against MM Grupp OÜ over its acquisitions of cinemas in Vilnius and Kaunas that were owned by Forum Cinemas Lithuania. On 7 April 2023, the Competition Council also imposed interim measures on MM Grupp OÜ, prohibiting it from further acquiring of Forum Cinemas Lithuania assets. Currently, the investigation is still ongoing, but is...

CSOP—income tax and NICs treatment of options

CSOP—income tax and NICs treatment of options If implemented and maintained correctly and in accordance with the company share option plan (CSOP) legislation, the income tax and National Insurance contributions (NICs) treatment of qualifying CSOP options can be very favourable. This Practice Note details the income tax and NICs treatment of qualifying CSOP options as detailed in Part 7, Chapter 8 of the Income Tax (Earnings and Pensions) Act 2003 (ITEPA 2003). For an explanation of the capital gains tax and corporation tax treatment of CSOP options, see Practice Note: CSOP—CGT treatment and corporation tax treatment. Income tax—basic principles Income tax is a tax on income but not all income is taxable. Individuals are only taxed on ‘taxable income’ above a certain level. There are various reliefs and allowances that can reduce the amount of tax payable. For details of the income tax charge, including to whom it relates and how to calculate the charge, see Practice Note: What is the basis of income tax? For details of the...

Discover our 132 Practice Notes on Minority shareholder

Declaration of interest form—procurement—general commercial organisation

Declaration of interest form—procurement—general commercial organisation Part 1 To be completed by any member of staff involved in any form of procurement for or on behalf of [Insert organisation’s name], including Executive Directors, interims, secondees, temporary staff and contractors—whether or not they have an interest to declare. 1 Your details Name (print): [Insert name] Job Title: [Insert job title] 2 Details of the procurement: Goods/services to be procured [Insert details] Potential suppliers/bidders/tenderers [Insert details] Estimated total contract value [Insert details] Budget holder [Insert details] Project initiation document (PID) number [Insert details] 3 Declaration and signature All staff must complete one of the following statements and return the form to: [insert person or department to receive forms, eg Finance Director or Legal Department]. Please tick to indicate which statement applies. EITHER 3.1 □ I have reviewed the Declaration of Interest Form in Part 2 and have no interests to declare. I will inform [Insert organisation’s name]’s [insert person or department] of any changes to the information...

Heads of terms—corporate joint venture

Heads of terms—corporate joint venture Date: [insert date] Subject to contract 1 Introduction 1.1 These heads of terms set out the principal terms and conditions upon, and subject to, which [insert name of first shareholder] (Party A) and [insert name of second shareholder] (Party B) are proposing to enter into a joint venture to [insert purpose of joint venture] (the Proposed Joint Venture). Each of Party A and Party B is a party and together they are the parties. 1.2 The terms in this document are not exhaustive and[, with the exception of paragraphs 7.2, 8, 9, 10, 11 and 12,] are subject to contract and not intended to be legally binding on the parties. Neither party to this document shall be legally bound to proceed with the Proposed Joint Venture unless and until a formal written joint venture agreement is entered into. 2 The joint venture Party A and Party B wish to enter into the Proposed Joint Venture to [insert purpose of joint venture and...

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What remedies would be available to a minority shareholder where a majority shareholder breaches the provisions of the joint venture shareholders' agreement and/or articles of association?

What remedies would be available to a minority shareholder where a majority shareholder breaches the provisions of the joint venture shareholders' agreement and/or articles of association? If a majority shareholder acts in breach of a shareholders' agreement, the remedies available to the minority shareholder will be the usual contractual remedies, namely: • damages (requiring the claimant both to prove its loss and to mitigate it), or • possibly injunctions against breach (where damages would not be an adequate remedy) where the claimant has advance notice of an intended breach or to compel compliance with some obligation The conduct of shareholders in their capacity as such is not an 'affair of the company' such as to engage relief for unfairly prejudicial conduct under section 994 of the Companies Act 2006 (CA 2006). However, if the majority shareholder's conduct extends to some aspect of the company's affairs then relief may be available. For example, if the breach is the exclusion of the minority shareholder from the company's management, that...

Can a private company limited by shares carry out a rights issue?

Can a private company limited by shares carry out a rights issue? A rights issue is an offer of shares to existing shareholders of a company, which gives them the right to subscribe for additional shares in proportion to their existing shareholding in the shares of the company, eg, a right for each shareholder to subscribe for one new share for every five shares that they hold. The shares are usually offered to the existing shareholders by means of renounceable letters or other negotiable instruments. If a company wants to raise new capital through an issue of its ordinary shares for cash, it is prima facie obliged by section 561 of the Companies Act 2006 (CA 2006) to do so by means of a rights issue in favour of its existing shareholders. CA 2006, s 561 sets out statutory pre-emption rights and states that a company must not allot equity securities to a person on any terms unless: • it has made an offer to each holder of...

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Strike out and summary judgment in unfair prejudice petitions (Willoughby v Cole and another)

Dispute Resolution analysis: On an application for strike out and summary judgment of parts of a defence to a section 994 of the Companies Act 2006 (CA 2006) unfair prejudice petition, the court considered the extent to which historic misconduct might justify the removal and exclusion of a director. The Insolvency and Companies Court took a dim view of purported justifications dating back many years, even if serious at the time, and even if supported by more recent (but more modest) alleged wrongdoing. The petitioner's application was granted with orders for strike out and summary judgment. Written by Christopher Burt, legal director at Wedlake Bell LLP.

Arbitration weekly highlights—12 September 2024

This week's edition of Arbitration weekly highlights includes: coverage of the UK Arbitration Bill reaching the committee stage; a Law Society report hailing England and Wales as the world’s legal centre; coverage of arbitration-related decisions from Malaysia, the Netherlands, and Australia; updates from the SCC Arbitration Institute, VIAC, UNCITRAL, and UNCTAD.

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