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Article
Publication date: 1 January 2013

Khurram Parvez Raja

The unfair prejudice remedy as contained in s.290 of the Companies Ordinance 1984 entitles a member with a shareholding of twenty percent or more to petition to the court for…

Abstract

Purpose

The unfair prejudice remedy as contained in s.290 of the Companies Ordinance 1984 entitles a member with a shareholding of twenty percent or more to petition to the court for suitable and appropriate court orders in circumstances where the member has been unfairly prejudiced. The major difficulties and complexities emerging from the examination of s.290 relates to (but not limited to) locus standi, high cost of litigation due to the length and complexity of the unfair prejudice litigations, lacunas in share valuation, cumbersome court procedures, low quality of pleadings, unethical conduct of lawyers, etc. The purpose of this paper is to shed light on these topical questions. It is contended that the legislature and the courts will have a strong role to play in providing clarity and certainty to the law.

Design/methodology/approach

The first part provides a brief overview of the statutory unfair prejudice remedy contained in s.290. The second part discusses the concept of unfair prejudice in the United Kingdom and its difficulties. The third part provides a framework of the unfair prejudice remedies available under s.290 and discusses the inefficiencies and shortcomings of the remedy.

Findings

This article concludes that the statutory unfair prejudice remedy in Pakistan is inefficient and inadequate to redress personal and corporate wrongs in an unfair prejudice petition. The deficiencies of the statutory unfair prejudice remedy pose a challenge to the minority shareholders and the overall corporate governance and corporate law regime in Pakistan.

Originality/value

This article sheds light on the complexity and difficulty of the statutory unfair prejudice remedy, as contained in s.290 of the Companies Ordinance 1984 from a comparative law perspective.

Article
Publication date: 1 January 1996

Alan Gregory and Andrew Hicks

This article reviews the way in which the law in England and Wales considers the valuation of companies, and argues that the issues arising from this legal perspective are…

423

Abstract

This article reviews the way in which the law in England and Wales considers the valuation of companies, and argues that the issues arising from this legal perspective are indicative of a gap between the economic theory and practice of company valuation. Furthermore, an analysis of the relevant case law reveals several interesting practical difficulties which may suggest a role for theoretical analysis. Equally, a lack of awareness of the economic theory of valuation is revealed on the part of the courts. It is argued that this lack of awareness may have implications for the practices of valuation by professional accounting firms that are currently observed in the UK. An examination of the theory of company valuation shows that there is widespread agreement on the basic principle of the approach to be followed in valuing the shares in a company; in short, it is the present value of the company's future cash flows. Although there is debate over issues such as the appropriate model to be used in pricing risk, and how to allow for the impact of taxation in arriving at the discount rate, this principle appears to be universally accepted. Although some investigations have been carried out into the practical context of company valuation in the UK (Arnold and Moizer 1984, Moizer and Arnold 1984, Day 1986, and Keane 1992), no attention has been paid in the economics and accounting literature to the legal context. This is perhaps surprising given that the courts are sometimes important users of company valuation reports. This article reviews the way in which the law in England and Wales considers the valuation of companies, and argues that the issues arising from this legal perspective are indicative of a gap between the economic theory and practice of company valuation. Furthermore, an analysis of the relevant case law reveals several interesting practical difficulties which may suggest a role for theoretical analysis. Equally, a lack of awareness of the economic theory of valuation is revealed on the part of the courts. Historically, one of the features of the English commercial courts has been their refusal to become involved in matters of commercial judgement. English judges have held themselves to be sophisticated technicians in law but self‐professed amateurs in commercial matters. Their role has been to hear expert witnesses and to weigh up their professional advice. This contrasts with the position in continental courts; for example in France, the judges sitting at first instance in the lower commercial courts are businessmen and women rather than lawyers, with the result that their approach and findings are likely to be less legalistic and more commercial. This English legal approach needs to be seen in the context of an increasing concern with valuation attributable to the changes brought about by Sections 459 to 461 of the Companies Act 1985, together with the recent case law. Section 459 of the Act is concerned with minority unfair prejudice actions and under that section a member may petition the court for an order on the grounds that the petitioner's interests have been, are being or will be unfairly prejudiced by the conduct of the company's affairs. A considerable body of case law has built up on what constitutes unfairly prejudicial conduct. Under section 461 the court may make such order as it thinks fit for giving relief including the purchase of the shares of any member of the company by other members or by the company itself. Here the crucial question for the courts and for the parties negotiating a buy‐out in the shadow of the courts is the amount of the valuation and the factor to be taken into account in reaching that valuation. In such circumstances, it might be expected that there would be considerable concern with the basis of the valuation. However, ‘basis’ can have several different meanings; in the first place, it could be defined as asset basis, in the sense that a valuation may be concerned with the replacement, ‘going concern’ or realisable value of the firm's assets. Second, there is a need to define what economic model has been used to derive the ‘going concern’ or economic value; it may be helpful to describe this as the economic model basis of the valuation. Third, there is the question as to whether the proportion of the equity held affects the value; this might be termed the control basis. As we show below, the concern of the theoretical literature is primarily with the second category, whereas the case law tends to concern itself with the first and third categories. In order to clarify the theoretical and practical considerations involved, the first section of this paper briefly reviews the theory of equity valuation and the second contrasts this with the rather limited evidence on UK valuation practice. In the third section, the legal issues involved are explained and the way in which the courts proceed in cases which involve the valuation of shares are reviewed. Although the courts rely on expert evidence in making a valuation, certain principles and guidelines for valuation are laid down by the courts, and these are analysed and contrasted with the prescriptions on valuation found in the finance literature.

Details

Managerial Law, vol. 38 no. 1
Type: Research Article
ISSN: 0309-0558

Article
Publication date: 18 September 2007

Philip Lawton

The paper aims to explore the extent to which the legal experience of minority shareholder actions in Hong Kong supports the sociological model of the Chinese family firm as…

1068

Abstract

Purpose

The paper aims to explore the extent to which the legal experience of minority shareholder actions in Hong Kong supports the sociological model of the Chinese family firm as developed by Wong Siu‐lun and reports some preliminary findings for the period 1980‐1995.

Design/methodology/approach

This paper is based upon the analysis of 275 minority shareholder petitions in the High Court of Hong Kong between the years 1980 and 1995 inclusive. It also draws upon material from a questionnaire sent to law firms involved in those petitions and interviews with members of the Hong Kong judiciary with experience of hearing minority shareholder cases, members of the legal profession and accounting and company secretarial professions directly or indirectly involved in the administration of companies in Hong Kong and regulators.

Findings

The findings indicate that the problematic early, emergent stage of the model as described by Wong Siu‐lun is quite accurate. Whilst there is considerable support for some aspects of the model of the Chinese family firm, the experience indicates a number of complex dynamics at play, some of which the model does not take into account. However, the findings, at least by implication, do point to the cohesive strength of the Chinese family firm with occasional fault lines resulting in some “disputes” of earthquake proportions which may rumble on in some cases for years.

Practical implications

The findings demonstrate the usefulness of lifecycle modeling of the family and other type of corporate firm. It also demonstrates some of the complex subtleties at play. The findings also have implications for the law matters thesis of La Porta et al.

Originality/value

This is one of the first studies to actually examine the legal experience of minority shareholder protection in a particular jurisdiction (Hong Kong) by examining the petitions and writs actually filed and relating them to a sociological model of the Chinese Family firm.

Details

Managerial Law, vol. 49 no. 5/6
Type: Research Article
ISSN: 0309-0558

Keywords

Content available
Article
Publication date: 19 April 2011

Oliver Turner James Laycock

144

Abstract

Details

Strategic Direction, vol. 27 no. 5
Type: Research Article
ISSN: 0258-0543

Article
Publication date: 4 February 2021

Anthony Nwafor

A company that is registered with share capital may issue different classes of shares and may confer rights on members, which place them in different classes in the company’s…

Abstract

Purpose

A company that is registered with share capital may issue different classes of shares and may confer rights on members, which place them in different classes in the company’s organisational structure. This paper is concerned with the propensity for encroachment on such vested class rights as companies strive to wriggle out of business challenges spawn by the COVID-19 pandemic. The purpose of this study is to ascertain the extent of protection that the law accords to the different classes of shareholders and members in a company especially when the company seeks to vary the vested class rights.

Design/methodology/approach

A doctrinal methodology, which relies on existing literature, case law and statutory instruments, is adopted to explore the nature of class rights and the adequacies of the remedial measures availed by statute to the aggrieved bearers of class rights in the context of the South African Companies Act 71 of 2008 with inferences drawn from the UK companies statute and case law.

Findings

The findings indicate that accessing the remedies available to aggrieved shareholders under the relevant statutory provisions are fraught with conditionality, which could make them elusive to those who may seek to rely on such provisions to vindicate any encroachment on their class rights.

Practical implications

The paper embodies cogent information on the interpretation and application of the relevant statutory provisions geared at the protection of shareholders class rights, which should serve as guides to companies and the courts in dealing with matters that affect the vested class rights of shareholders and members of a company.

Originality/value

The paper shows that protections offered to classes of shareholders under the law can also be extended to classes of members who are not necessarily shareholders, and that shareholders who seek to vindicate their class rights may conveniently rely on Section 163 that provides for unfair prejudice remedy to avoid the onerous conditions under Section 164 of the South African Companies Act 71 of 2008, which directly deals with class rights.

Details

International Journal of Law and Management, vol. 63 no. 5
Type: Research Article
ISSN: 1754-243X

Keywords

Article
Publication date: 5 October 2015

Charles KN Lam and S.H. Goo

The purpose of this paper is to discuss two important aspects of enforcement of ethical standards: indirect enforcement, that is the Confucian approach, and common law…

488

Abstract

Purpose

The purpose of this paper is to discuss two important aspects of enforcement of ethical standards: indirect enforcement, that is the Confucian approach, and common law enforcement. In the context of Confucianism, one must adopt the ethical teachings in a moderate or “middle” way. We should not be too attached to the liberal interpretation of the Confucian texts but must have the wisdom to apply the concepts case-by-case. The issue then is if there are no legal consequences or punishment, then how we can ensure that someone will continue to comply with the standards.

Design/methodology/approach

The authors analyze the Confucian texts in relation to the enforcement of the ethical standards. The authors investigate the Entity Maximization and Sustainability Model by referring to the exit option, the voice option, the influence exerted on the board of directors, the sending of the Confucian representatives to sit on the board of directors, the oppression remedy and statutory derivative actions. The authors adopt a comparative study approach and argue that the Confucian enforcement of ethics can fill in the gap where common law rules of procedure cannot reach in the context of Chinese corporate governance system.

Findings

By referring to the Confucian teaching, there are several ways to encourage the superior to follow the ethical standards, namely, education, fear of punishment by society, peer pressure, intrinsic value, continuing education and codification of Confucian value/moral standards. In addition, there are several enforcement options based on the Entity Maximization and Sustainability Model, which is highly relevant to the enforcement model of Confucianism.

Originality/value

It is the first of its kind in strengthening the enforcement of Chinese business ethics by adopting the Confucian approach and common law approach. The two are not mutually exclusive but complementary with each other to bring the enforcement of Chinese business ethics to the next level.

Article
Publication date: 1 February 1997

Flora Page

Fraud is not yet universally recognised or understood as a crime, in the way that theft is. All sectors of our society recognise shoplifting as a crime, whereas an exaggerated…

Abstract

Fraud is not yet universally recognised or understood as a crime, in the way that theft is. All sectors of our society recognise shoplifting as a crime, whereas an exaggerated insurance claim tends to be seen more as a matter of personal morality than public law and order.

Details

Journal of Financial Crime, vol. 4 no. 4
Type: Research Article
ISSN: 1359-0790

Book part
Publication date: 1 November 2008

Arad Reisberg

This chapter analyses recent reforms of the derivative claim in the UK as implemented by the Companies Act 2006. Recent reforms and modernisation of company law is part of a drive…

Abstract

This chapter analyses recent reforms of the derivative claim in the UK as implemented by the Companies Act 2006. Recent reforms and modernisation of company law is part of a drive to facilitate enterprise and enhance the attractiveness of the UK as a location in which to do business. The reforms of derivative claims are, naturally, part of this wider drive. The chapter focuses on those areas that are particularly relevant to the question of whether the new legal framework relating to derivative claims is likely to promote these goals.

Details

Institutional Approach to Global Corporate Governance: Business Systems and Beyond
Type: Book
ISBN: 978-1-84855-320-0

Article
Publication date: 13 July 2015

Philip J Wells

The purpose of this paper is to provide a critical analysis of the various proposals to regulate executive pay in the UK. Situated within a corporate governance context, it…

3383

Abstract

Purpose

The purpose of this paper is to provide a critical analysis of the various proposals to regulate executive pay in the UK. Situated within a corporate governance context, it focuses on using shareholder empowerment as a mechanism to formulate a regulatory strategy to quell the continued furore that surrounds the issue.

Design/methodology/approach

Using an expansive array of different academic materials, the paper adopts the approach of using critical analysis to provide an original insight into the popular and contentious issue of executive remuneration.

Findings

The paper finds that the UK Government’s current proposal to regulate executive remuneration, via the shareholder empowerment device of a binding vote on remuneration, will primarily consist of symbolic rather than practical significance.

Social implications

The paper provides important social implications, as it provides a new prospective and insight into the well-covered issue of executive remuneration.

Originality/value

The paper draws on a host of traditional and modern academic materials to create a new viewpoint on the issue of remuneration. Moreover, the paper is original insofar that it ties the issue of shareholder empowerment into the conceptual design and formulation of company law and corporate law theory.

Details

International Journal of Law and Management, vol. 57 no. 4
Type: Research Article
ISSN: 1754-243X

Keywords

Article
Publication date: 1 January 1977

A distinction must be drawn between a dismissal on the one hand, and on the other a repudiation of a contract of employment as a result of a breach of a fundamental term of that…

2045

Abstract

A distinction must be drawn between a dismissal on the one hand, and on the other a repudiation of a contract of employment as a result of a breach of a fundamental term of that contract. When such a repudiation has been accepted by the innocent party then a termination of employment takes place. Such termination does not constitute dismissal (see London v. James Laidlaw & Sons Ltd (1974) IRLR 136 and Gannon v. J. C. Firth (1976) IRLR 415 EAT).

Details

Managerial Law, vol. 20 no. 1
Type: Research Article
ISSN: 0309-0558

1 – 10 of 93