It is not uncommon for minority shareholders to find themselves feeling hopeless in circumstances where they feel “bullied” by their majority shareholders in business relations. Within the company’s structure itself, internal politics and conflicts often occur – not only at a board level, but also within the different ranks of its shareholders.
Shareholders may want to dispose of their shares for various reasons, including either a breakdown in business relations or being prohibited from actively exercising their rights. These circumstances can be especially detrimental where minority shareholders find themselves being prejudiced by the majority shareholders.
Luckily, legislative recourse is available to these minority shareholder groups, offered by section 163 of the Companies Act 71 of 2008, which provides for the protection of shareholders’ rights. Prior to the 2008 Act, prejudicial conduct was regulated by section 252 of the Companies Act 61 of 1973.