Keeping Everton in Our City

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 Post subject: Minority Shareholder options...
PostPosted: Tue Jul 21, 2009 9:16 pm 

Joined: Sun Mar 09, 2008 12:17 am
Posts: 20
After reading the transcript of the AGM... sorry shareholder forum on the 15th July, I came to the conclusion that the small shareholders have absolutely no rights or voice anymore since the action taken last year in removing the need for an AGM.

Obviously this action was taken so that Bill and friends wouldn't have to answer any of those meaningless questions that we as fans have asked regarding to the asking price, the question of the mandate or indeed just why we're going to Kirkby.

The next question is why bother being a shareholder in light of this, as what little rights you may have previously had have now been taken away. Devalued perhaps, and then I stumbled accross this....

Shareholder Disputes

Section 459 Companies Act 1985

If a dispute arises between shareholders, after considering the small print of the Company’s Articles of Association, probably the next most important legal principle for any shareholder to understand is Section 459 of the Companies Act 1985. The most relevant part of the provision states as follows:-

“A member of a company may apply to the court… for an order under this Part on the ground that the company’s affairs are being or have been conducted in a manner which is unfairly prejudicial to the interests of its members generally or of some part of its members…” [emphasis added; a “member” is simply a shareholder]

The section is, in itself, worded in a very legalistic manner and many lawyers find it difficult to understand, so what chance does the layman have?

What the section seeks to do is protect minority shareholders (those with a 50% shareholding or less) in circumstances where the majority shareholders seek to act in a way which is “unfairly prejudicial” to their interests. So the provision protects minority shareholders from “unfairly prejudicial” conduct, but what is that?

It would be impossible to accurately reduce to only a few words the many legal authorities on precisely what conduct is classed as “unfairly prejudicial”, but in very general terms it means that minority shareholders have a right to complain to the court if the majority shareholder(s) run the Company in a manner that damages their position and the worth of their shareholding, often done deliberately and often by misapplying or misusing Company assets. But the complaint cannot be vague or trivial (e.g. “they’re managing the business badly”) and must stand up to some objective analysis. Examples of “unfairly prejudicial” conduct might be using company assets or money for the personal benefit of a shareholder or the majority shareholder(s) paying themselves far more than people in their position could objectively justify.

In short an injunction can be brought against the majority shareholder if it can be proven that they are not acting in the best interests of the club, or if the action taken has caused damage to the worth of the shareholding. Surely the act of removing the ability to call an AGM has diminished the value of a share in the club.

Indeed the club themselves have noted that the move to Kirkby will lose them support from the fanbase. Is this not damage to the value of the club. Maybe I'm barking up the wrong tree here, but i'm sure that the minority shareholders have been caused a loss by the actions taken by Kenwright et al. Maybe this could be used as a response.

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