The protection of minority shareholders under the M&A's and the Companies Act

Abstract

This thesis will attempt to explain the basic principle of protection available to minority shareholders through the Maltese Companies Act, 1995 (the ‘Act’), in particular section 402 and section 214, as well as any remedies available in the aforementioned sections of the Act. This examination of the protection of minority shareholders will be seen from the point of view of an individual from a non-legal background and will attempt to breakdown this principle in layman’s terms. Article 402 and Article 214(2)(b)(iii) of the Act, which provide for the ‘unfair prejudice’ remedy and that of winding up of a company on ‘grounds of sufficient gravity’ respectfully, will be examined in the light of what protection and remedy they provide and how these have been applied in a number of Maltese court cases. A brief examination of which foreign jurisdictions were an inspiration in the drafting of these two articles, will also be carried out. Particular clauses which may be included in a company’s M&As to provide further protection to minority shareholders will also be mentioned. The last chapter of this thesis will attempt to highlight a number of recommendations or short comings found within the Act.