I Am a Shareholder and My Requests Are Being Ignored – What Are My Rights?

The answer to this will largely depend on a number of factors including; what has been agreed in contracts, if anything; what has happened historically and whether there has been a change; if there has been a change – why/how that change has been agreed and/or has taken place. Shareholders do not have an automatic right to information or to request X, Y or Z in terms of the direction of any company or steps it is taking. That said, Shareholders are the ultimate owners of a company and so Directors and ‘the board’ are answerable to Shareholders. The amount of control and ‘say’ a Shareholder will have will depend on the content of any Shareholders agreement; the content of the articles of association; and the percentage of shares they own. Shareholders can require extraordinary general meetings and/or can vote at annual general meetings. Calling meetings, proposing and passing resolutions are all important and technical processes that must take place in accordance with the articles. 

The issue of shareholding percentages is in itself incredibly complex. Shares can have voting and non-voting rights, can be of different classes, can be non-diluted or fully diluted. Issued share capital can change. Specific circumstances are therefore important to note. 

As a general starting point if a shareholder has a minority shareholding (less than 50% of shares in a company, with those shares having voting rights) the following legal rights will apply:

• more than 25%: a Shareholder with more than 25% shares can prevent special resolutions being passed for example changes to the articles of association or the company name;
• 15% or more: can request the court prevent a variation to the rights of share classes;
• 10% or more: can require a vote at a general meeting of the company; and
• A Shareholder with 5% or more issued shares: can require the circulation of a proposed written resolution and a general meeting to be held to consider it.

With the above in mind, minority Shareholders have significant rights and protections. A minority Shareholder of any shares can suffer from unfair prejudice from/caused by other Shareholders, and can pursue an unfair prejudice petition. 

Where a Shareholder owns 75% or more of the issued share capital in a company that will however mean that Shareholder is in a strong position – able to pass special resolutions. This is therefore an important level of ownership and control. 

A Shareholder of over 50% is able to pass ordinary resolutions for example resolutions; (a) authorising the Directors to allot shares; and (b) appoint and/or remove a Director.

All Shareholders of a private limited company are entitled to inspect records of minutes of board meetings (the minutes) and copies of all Shareholders’ written resolutions. Shareholders at any level are also entitled to receive notice of general meetings and copies of the company’s report and accounts.

If other Shareholders are excluding you from management or decision making where you have such rights within a Shareholder agreement, articles of association or you have by informal agreement historically (and there has now been a change), you may have a claim for unfair prejudice.