Is a shareholders’ agreement really necessary … part 2 !

Being a minority shareholder in conflict with a couple of majority shareholders without a shareholders’agreement is not desirable. The advantageous solutions are very limited. He can sell his shares to the majority shareholders, but these can make him wait a very long time, until they get the price they want. During this time, the majority will have excluded him from the company’s affairs by dismissing him as an employee, officer and director, with no income.

What options remains for the minority shareholder ? The first, would be to ” importunate ” the majority by ” reasonably overwhelming ” them, that is to say by legitimately asking to inspect the books, require audited financial statements, challenge the validity of the convocations of the assemblies… With a such behavior, the majority shareholders will probably have enough and will offer him to buy his shares at a reasonable price only to get rid of him.

The shareholder could ask the court to dissolve the company, but to do so, there must be serious grounds, for example abusive and fraudulent behavior of the majority shareholders.

Finally, there remains the threat of a judicial oppression recourse against the majority shareholders. However, this avenue is likely to eat away at the profit of the minority shareholder since it is necessary to consider the lawyers’fees, without a guarantee of success…

A good option for a minority shareholder remains a settlement. He will certainly get a lower price than he expected for his shares, but it’s the price to pay for not being careful enough for not having signed a shareholders’ agreement that would have cost him tens of thousands of dollars less…

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