Law for Commerce
Discuss broadly held corporations shareholder rights and distinguished between derivative action dissents
and oppression remedies
Introduction
Shareholders have the right to vote during the annual general meeting and participate in the
election of the company officials and directors of the company. The shareholders also have the
right to receive any dividends that have been awarded or to receive any bonus issues made. The
ordinary shareholders are like the owners of the company and they have the right to be informed
on the progress of the company (Chandra, 2007).
However, preferential shareholders only have the right to dividends. There powers are limited to
the amount of interest that their rights have against the company.
Law for Commerce 2
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A derivative action arises where individual shareholders maintain their rights to sue the directors
for breaches regarding the corporation as in the case of Donahue v Rodd Elctrotype Co (1975) of
New England 367 Mass 578.
The majority shareholders cannot be allowed to oppress the minority shareholders as all the
shareholders enjoy equal rights and are allowed to vote fairly as per their shareholdings.
The remedies may involve the court decision to lift the veil incorporation that protects the
directors to be sued on their names. They are also allowed to maintain a collection action
problem or to derive a claim on behalf of the corporation to sue for breach of duty but the parties
must seek the court’s consent before bringing such an action.
Oppression remedies are provided by the court where the directors or the majority shareholders
have been oppressive in their actions or inactions against mostly the minority shareholders as in
the case of Donahue v Rodd Elctrotype Co above.
References
Chandra, G. (2007) Company Law, 3rd Edition; McGraw-Hill Education
Donahue v Rodd Elctrotype Co (1975) of New England 367 Mass 578
