Navigating the storm: resolving shareholder disputes on the removal of a shareholder/director

It’s a common scenario:  a director of a private company, who is also a shareholder, is removed by the majority shareholders and they seek to operate compulsory transfer provisions to transfer his/her shares, often as a Bad Leaver, under the terms of the Articles or a shareholders’ agreement.  This can be fertile ground for a bitter dispute which may lead to the presentation of a petition under section 994 of the Companies Act 2006.

This panel session will consider the potential legal issues that may arise in this scenario as well as some of the key questions relating to expert valuation evidence in relation to a buy-out of the petitioner’s shares.  The session will consider:

• Introduction to sections 994 and 996 Companies Act 2006.
• Who has standing to petition under section 994?
• Compulsory transfer provisions – when is urgent action and injunctive relief necessary?
• Can a shareholder who is removed from the register of members after presenting a petition under section 994 proceed to trial?
• Typical grounds for a section 994 petition on the removal of a shareholder/director (including consideration of Good/Bad Leaver provisions).
• Rectification of the register and unfair prejudice – one action or two?
• Disclosure, privilege and the shareholder rule.
• Limitation in unfair prejudice.
• Basis of valuation – Articles or market value?
• Minority discount:
(i)  Where does the law stand?
(ii) Valuation:  what is the range of minority discounts which may be ordered and what are the factors that may impact on the extent of the minority discount to be applied in any particular case? 
• Practical tips to get the best out of your valuer and how to use him/her most efficiently.
• Court’s discretion on valuation date.