Discussion - Companies Act - Law
Companies Act Chapter 81:01:- "No association, society, body or other group consisting of more than ten persons may be formed for the purpose of carrying on any trade or business for gain unless it is—
(a) incorporated under this Act;
(b) Formed under some other written law; or
(c) A partnership"
According to the Companies Act Chapter 81:01, a “shareholder”, in relation to a company, means a person described in section 107(1); which states that a shareholder is:
(a) a person who is a member of the company under section 349(3);
(b) The personal representative of a deceased shareholder and the trustee in bankruptcy of a bankrupt shareholder;
(c) a person in whose favour a transfer of shares has been executed and delivered but whose name has not been entered in the register of members of the company or, if two or more such transfers have been executed and delivered, the person in whose favour the most recent transfer has been made, provided that in the case of a company other than a public company in respect of the persons mentioned in paragraphs (b) and (c).
“The majority usually dictates the action of a company and the minority is usually bound by the decisions of the majority (Foss v Harbottle (1843)). Problems may arise where those in effective control of a company use their power in such a way as either to benefit themselves or to cause a detriment to the minority shareholders. In the light of such a possibility, the law has intervened to offer protection to minority shareholders. The source of the protection may be considered in three areas: * Fraud on the minority: it has long established at common law that those controlling the majority of the shares are not to be allowed to use their position of control to perpetuate what is known as a fraud on the minority. In such circumstances, the individual shareholder will be able to take legal action in order to remedy their situation (Cook v Deeks (1916)); * Just and equitable winding up; *
(a) incorporated under this Act;
(b) Formed under some other written law; or
(c) A partnership"
According to the Companies Act Chapter 81:01, a “shareholder”, in relation to a company, means a person described in section 107(1); which states that a shareholder is:
(a) a person who is a member of the company under section 349(3);
(b) The personal representative of a deceased shareholder and the trustee in bankruptcy of a bankrupt shareholder;
(c) a person in whose favour a transfer of shares has been executed and delivered but whose name has not been entered in the register of members of the company or, if two or more such transfers have been executed and delivered, the person in whose favour the most recent transfer has been made, provided that in the case of a company other than a public company in respect of the persons mentioned in paragraphs (b) and (c).
“The majority usually dictates the action of a company and the minority is usually bound by the decisions of the majority (Foss v Harbottle (1843)). Problems may arise where those in effective control of a company use their power in such a way as either to benefit themselves or to cause a detriment to the minority shareholders. In the light of such a possibility, the law has intervened to offer protection to minority shareholders. The source of the protection may be considered in three areas: * Fraud on the minority: it has long established at common law that those controlling the majority of the shares are not to be allowed to use their position of control to perpetuate what is known as a fraud on the minority. In such circumstances, the individual shareholder will be able to take legal action in order to remedy their situation (Cook v Deeks (1916)); * Just and equitable winding up; *
References: 1. Laws of Trinidad and Tobago. Ministry of Legal Affairs https://www.ttbizlink.gov.tt/trade/tnt/cmn/pdf/Companies%20Act-81.01.pdf 2. Routledge Cavendish. “Company Law” Lawcard Series, Business Law Pg 89-90. 3. Ashfords Solicitors , “Guide to Unfair Prejudice Against Shareholders” Last Modified Monday 8th February, 2010. Darte accessed:20th June, 2012 http://www.ashfords.co.uk/news/shareholders_disputes_guide