subject: What Happens When Shareholders Defames And Slander Another Shareholder Name? [print this page] When and why this happens When and why this happens
A minority shareholder has less decisive powers as compare to majority stakeholder because majority has more liberty to influence decision making. However, a majority shareholder might end up practicing his powers rather unfairly (i.e. damaging the minority stakeholder's investment on account of one's own prerogative, misuse of company assets or funds, running an enterprise based on personal financial interests- ones that put the minority stakeholders at risk etc.). Where a minority shareholder lacks authority to block any unfair decision, serious disputes can arise which may imply harm to his reputation and business. All this could lead a minority shareholder to take some sort of revenge from other shareholders in the company and they may use negative publicity to defame other stakeholders.
To avoid these troubles, the clarity to exercise rights (before hand) must be settled legally in the form of a shareholder agreement.
What does the law state about Shareholder Rights?
In the United Kingdom, shareholder rights are offered complete protection under the Companies Act 2006 (section 994). In the event of an unfair decision, a minority stakeholder can file a law suit against the majority shareholder. However, terming any decision as merely unfair does not suffice and thus has to be backed by proper analysis on behalf of the minority stakeholder. Under the Companies Act 2006 (Section 996), if the grounds of the law suit are justified and established, the court can take a number of decisions (towards dispute resolution) but will usually order the majority stakeholders to purchase the stakes of minority shareholder at an appropriate value.
How can a shareholder agreement be helpful?
The shareholder agreement template provided by Netlawman is fully in line with the relevant law. Related legalities addressed in this agreement explain how a shareholder can exercise his rights to defend his position. It includes provisions to protect the rights of minority stakeholders and provides a outline of freedom for working shareholder-directors. It features arrangements for the valuation of shares of a departing shareholder. This document contains over twenty commercial paragraphs, technical legal provisions and guidance notes to assist you in selecting the provisions that serve you best. The legal provisions included in this document are:
Roles of directors and actions by the company or a director which require shareholders consent: controls and redistributes power between shareholders so that majority shareholders cannot force decisions
How shareholders will maintain their rights if they are not present at meetings
New shareholder rights and restrictions: even if he is a trustee in bankruptcy
Transfers of shares and rights of pre-emption: when allowed, under what conditions and to whom
Use of a shareholders own assets in the business
Obligations of the company to the shareholders (the company is also a party to the agreement)
