Question

Sue, Sally and Daisy were colleagues in a bridal retail shop. Two years ago, the three of them resigned from their company and opened their own company providing wedding services. The three of them were the only shareholders and directors of the company. They worked full-time in their company without drawing any salary. However, each received a substantial fee as director. Recently, there was an argument over whether they should go into the catering business. Daisy objected to the proposal saying that the market was already saturated with catering businesses. However, Sue and Sally outvoted her at a directors’ meeting and proceeded with their plans. After that incident, their relationship started to deteriorate. Daisy found Sue and Sally disagreeing with her over many matters. Eventually, Sue and Sally, as majority shareholders, voted to remove Daisy from the board of directors. Daisy has just found out about this and is very upset.

Required: Advise Daisy on what legal recourse she might have under the Companies Act.

Answer 1

There are certain laws and regulations in the company act that states the manner in which the minority. These rules are mentioned in the anti-oppression statutes that state that the majority shareholders are restricted not to use their power in such a manner that it only serves their interest and result in unjust harm to the minority shareholders.

Daisy has the option to file a tort cause of action as per the legal theory of the fiduciary duty breach. In the second option provided to her, she can ask the court to dissolve the business involuntarily. This request must be supported with clear proof that the other shareholders were having the unfair practices that created the financial burden on the minority shareholders.