Minority Shareholders Which Are Enforceable Against Other Shareholders

Where a wrong is done which infringes upon the personal rights of a shareholder, the shareholder is entitled to a personal right of action to enforce the personal rights conferred under the articles of association, shareholders agreement, statute or common law. Remedies may be sought for the sole benefit of the shareholder.

For examples, majority shareholder has committed fraud on a minority shareholder by passing a resolution authorizing the issue of shares for the purpose of diluting the minority shareholder’s shareholdings;
Examples of wrong doing by a majority shareholder which may entitle a minority shareholder to bring a personal action against a majority shareholder; altering the articles of association which is not bona fide for the benefit of the company as a whole; majority shareholders intend to pass a resolution resulting in the destruction of the economic value of other shareholders’ shares for no rational reason.

Under Sections 728 to 729 of Companies Ordinance, the court may grant an injunction to restrain any breaches or contravention of the Companies Ordinance or any breach of fiduciary duties by the directors or any breach of the articles of association, upon the application by an affected person. The court may also grant an injunction on such terms as the court thinks fit or order the person to pay damages.