Minority Oppression Remedy: Court Discretion And Its Limits. Analysis Of The BVI Case Law

• Published date: 07 January 2021
• Subject Matter: Corporate/Commercial Law, Litigation, Mediation & Arbitration, Corporate and Company Law, Trials & Appeals & Compensation, Shareholders
• Law Firm: Conyers
• Author: Mr Jerry Samuel and Jevgenija (Jane) Fedotova

Under section 184I(2) of the BVI Business Companies Act, 2004 (Act) the Court may, if it considers that it is just and equitable to do so, order relief that it thinks fit, if the conduct of which the member of a company complains is oppressive, unfairly discriminatory or unfairly prejudicial to that member. For the purpose of section 184I beneficial owners of shares are not members¹ .

This relief, commonly referred to as the oppression remedy, was introduced in the UK Companies Act, 1948 as an alternative to winding up on the just and equitable ground, which was regarded as too drastic a remedy in many cases² . Under section 184I of the Act, the Court has a wide discretion. However, there are limits to what the Court may order. This article discusses the types of relief that the BVI Court may order, considers how the court exercises its discretion and identifies the limits of that discretion based on leading BVI case law.

Types of Relief

The oppression remedy is one of the most effective tools available to shareholders when the conduct of the affairs of a company causes oppression, unfair prejudice or unfair discrimination. Unfairness in this context must be judged on an objective basis³ . A good starting point for the purpose of ascertaining what type of relief a minority shareholder may seek is to look at the forms of relief available under section 184I(2) of the Act. The orders available include:

1. in the case of a shareholder requiring the company or any other person to acquire the shareholder's shares;
2. requiring the company or any other person to pay compensation to the member;
3. regulating the future conduct of the company's affairs;
4. amending the memorandum or articles of the company;
5. appointing a receiver of the company;
6. appointing a liquidator of the company under section 159(1) of the Insolvency Act on the grounds specified in section 162(1)(b) of that Act;
7. directing the rectification of the records of the company; and
8. setting aside any decision made or action taken by the company or its directors in breach of this Act or the memorandum or articles of the company.

Although the above list is non-exhaustive, the categories are broad and most of the other types of measures that the BVI Court has granted usually fall within one of the above categories. Examples of the types of relief not captured by the above list are:

1. suspending voting rights⁴;
2. temporarily (pending the shareholders meeting) prohibiting dealing with or disposing of any assets or property⁵ ; and
3. requiring a party to provide financial information about a company⁶ .

The measures most frequently sought by claimants in the BVI are buy-out of their shares⁷ and liquidation⁸ , often claimed in the alternative. Other remedies sought by shareholders include compensation orders⁹ and orders regulating the future conduct of the company's affairs¹⁰ .

Wide Discretion of the Court

The Court has a wide discretion, which is not restricted by the relief sought by the aggrieved party and may...