Week 4: Ownership & Control
Majority Rule
When a person becomes a shareholder, he or she agrees to be bound by the
decisions of the majority. This is subject to what is determined in the MOI but
there are provisions in the Act that is aimed at protecting minority
shareholders.
Majority decisions made in a lawful manner will prevail
How does the majority act?
By means of resolutions at general meetings
Either special or ordinary resolution depending on the nature of the
decision
Requiring a special resolution is one of the first protective mechanisms
Remedies
1. Remedies where there has been an abuse of position by director or
prescribed officer
An application can be made to declare a director delinquent or under
probation where a court is empowered to disqualify a delinquent
director from serving as a director or place a director under probation.
A shareholder can be given a statutory right to bring proceedings on
behalf of a company where the company has been prejudiced by
acts of controlling directors and where the company has failed to take
the necessary action to call these directors to account.
2. Remedies given to shareholders to protect their own rights
3. Remedies where that has been an abuse of the company’s separate
juristic person
Involves lifting of the corporate veil and the imposition of personal
liability where there has been abuse of the separate juristic personality
of a company.
Declaration of rights
Holders of securities may apply to court for declaratory order regarding rights
in terms of:
- The Act
- MOI
- Any rules of the company
- Any applicable debt instrument
Majority Rule
When a person becomes a shareholder, he or she agrees to be bound by the
decisions of the majority. This is subject to what is determined in the MOI but
there are provisions in the Act that is aimed at protecting minority
shareholders.
Majority decisions made in a lawful manner will prevail
How does the majority act?
By means of resolutions at general meetings
Either special or ordinary resolution depending on the nature of the
decision
Requiring a special resolution is one of the first protective mechanisms
Remedies
1. Remedies where there has been an abuse of position by director or
prescribed officer
An application can be made to declare a director delinquent or under
probation where a court is empowered to disqualify a delinquent
director from serving as a director or place a director under probation.
A shareholder can be given a statutory right to bring proceedings on
behalf of a company where the company has been prejudiced by
acts of controlling directors and where the company has failed to take
the necessary action to call these directors to account.
2. Remedies given to shareholders to protect their own rights
3. Remedies where that has been an abuse of the company’s separate
juristic person
Involves lifting of the corporate veil and the imposition of personal
liability where there has been abuse of the separate juristic personality
of a company.
Declaration of rights
Holders of securities may apply to court for declaratory order regarding rights
in terms of:
- The Act
- MOI
- Any rules of the company
- Any applicable debt instrument
