Unreasonable Shareholder Rebuffed By Court

Posted: 17th March 2011

A shareholder who sought, by refusing to agree to a share valuation, to force the company of which he was a shareholder to give him information he wanted, was rebuffed by the court recently.
A share valuation by the company’s accountant was required by the company’s articles of association in connection with his shares being bought out. Such provisions are common in company articles to decide the value of shares when shareholders leave the company and are required to offer their shares to the existing shareholders. The valuation required the agreement of the shareholders, which he refused to give.
By refusing to agree to the valuation, the shareholder sought to create a stalemate if the information he sought was not provided. The company went to court to force him to comply.
The court ruled that the articles should have implied into them a term that the agreement of the shareholders to the share valuation would not be unreasonably withheld.
If you have problems with dissentient shareholders or unreasonable majority shareholders, contact us for advice.