Do rights granted to minority shareholders give them unfair leverage over the majority, leading to tyranny of the minority?

Abstract

This thesis will attempt to analyse the current position in Malta in relation to whether the protection of minority shareholders goes beyond its intended remit. In addition to the legislative position, various principles of corporate law and Court judgements join the fray in an attempt to create an appropriate set of checks and balances. Articles 402 and 214[2][b][iii] of the Maltese Companies Act, that is the ‘unfair prejudice’ remedy and that of winding up a company on ‘grounds of sufficient gravity’ will be examined in relation to whether, and to what extent they are susceptible to abuse. The Court’s interpretation in this respect is fundamental, especially in light of the fact that the legislator bestowed the Court with wide discretion and left the operative terms largely undefined. Despite the fact that Maltese corporate law tends to operate well for the most part, cracks have emerged, and thus the potential for abuse. The final chapter of this thesis attempts to offer conclusions and suggestions for improvement in this respect.