Protection of Minority Shareholders in A Private Company: A Case Study of Kenya and Uganda.

TABLE OF CONTENTS

DECLARATION

DEDICATION ii

ACKNOWLEDGEMENT iii

LIST OF STATUTES iv

LIST OF CASES v

TABLE OF CONTENTS vii ii

CHAPTER ONE 1

1 .0 Background to the study 1

1.1 Definitions 2

1.I.i.Cornpany 2

1.1.2 An incorporated v unincorporated company 3

.1.3 A private v public company 4

1 .4 Shareholder 4

1.1.5 A majority v minority shareholder 6

1.2 Statement of the problem 6

I .3. Objectives of the study 7

I .4 Research questions 8

.5 Significance of the study 8

1 .6 Scope of the study 8

2 \/Iethodology 9

.8 i~tcrature Re~iew 9

v’II

CHAPTER TWO .14

2.0 ANALYSIS OF MEASURES FOR MINORITY SHAREHOLDERS~ PROTECTION 14

2 1 Introduction 14

2.2 Common Law Remedies 14

2.2.1 Common Law Rule in Foss v F-Iarbottle 14

2.3 Statutory Measures 21

2.3. 1 Just and equitable winding up 21

2.3.2 Statutory Remedy against unfair Prejudice or Oppression 24

2.3.3 Statutory remedy of Investigation and Inspection 26

2.3.4 Statutory remedy of Appointment of a Receiver 28

2.3.5 Statutory remedy of misfeasance summons 29

2.4 Conclusion 30

CHAPTER THREE 31

3.0 N on—Statutory measures for minority protection 31

3. 1. Introduction 31

3.2 Mergers 31

3.3 Shareholders Agreements 32

3.4 ( ‘onclusion 36

CHAPTER FOUR 37

~T 0 IFFEC I, OF THE MEASI RES PU I IN PLACE FOR MINORI lY PROTECTION 37

1 fipirothution 37

4.2 Ihe EII3~ct of rule in Foss ~ Harhottle 37

Prohlenis of (~omrnon L a~v Protection 39

Viii

4.3 The Effect ofthe Just and Equitable Winding Up Remedy .~

4.3.1 Problems ofthe Just and Equitable Winding Up 46

4.4 Effect of Remedy against unfair prejudice / oppression 46

4.4.2 Negative Effects 47

4.5 Eflèct ofStatutory Remedy ofInvestigation and Inspection 48

4.6 Effectof Statutory RemedyofMisfeasance Summons 49

4.7 Statutory remedy ofappointment ofa receiver 49

4.8 Conclusion 50

CHAPTER PI~/E

5.0 GENERAL CONCLUSION AND RECOMMENDATIONS 51

5. I.Introduciion 51

5.2 Revision of section 211 Si

5.3 Rnisiting the Rule in Foss v Harbottle 52

5.4 Prima facie Case in Deri~atiie Action 52

5.5 Categoritation ofConduct Amounting to Breach ofArticles of Association 53

5.6 Promoting Corporate Go’.cmance 54

5.7 Reducing Corruption and Improving Business Ethics 55

5.8 Conclusion 5