7 unfair prejudicial conduct s168a undefined in

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Unfair Prejudicial Conduct (s.168A) undefined In simple terms, is the minority shareholder being “bullied” by the majority shareholder? This section allows a minority shareholder to apply to court to make order as it thinks fit. The term ‘unfair prejudicial’ is not defined. Courts do not define it in order to provide maximum flexibility in interpretation.
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TSENG TUEH LEE, IRENE V METROBILT ENTERPRISE LTD [1994]2 HKC 684 T held 41% of the shares. ME Ltd held the remaining 59 %. The co. needed funds and proposed to make a rights issue. T could not afford to take up the shares and sought an order from the court to wind up the co. or for the purchase of her shares at a price to be determined by an independent valuer, and applied for an injunction to stop the rights issue. 9
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IT WAS HELD T was offered shares on the same terms as other shareholders did not necessarily mean that the rights issue was not unfairly prejudicial to T s interests. If the majority knew that T did not have the money to take up her rights and the offer was made at par, when the shares were worth a great deal more than par as a majority holding, it was arguable that carrying through the transaction could constitute unfairly prejudicial to T. The Privy council dismissed ME Ltd s application and granted T an injunction. 10
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Re Boken Ltd (1997) A minority shareholder, P, alleged that the company’s business had been diverted to other companies, that he had been excluded from the management and that the company’s affairs had been wounded down to its detriment. P sought an order to wind-up the company on the just and equitable ground and in the alternative, an order that his shares be bought out. The majority shareholders consented to winding-up and argued that it would be an abuse of the process to proceed with the s168A application. 11
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It was held P had made out a prima facie ( 表面上的 ) case of unfairly prejudicial conduct and was entitled to a full hearing as to what if any relief should be granted. An order to purchase a petitioner’s shares, if a valuation could be simply arrived at, was preferable to leaving the matter to a liquidator to take proceedings against the majority shareholders. The s168A petition was allowed to proceed. 12
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