As noted at the beginning of this analysis, the Directors and Shareholder Litigation Act is a complex and technical area. This guide aims to provide an overall result of the legal context in such litigation. More articles and discussions on shareholder rights can be found in Ed Weeks` articles on the subject on the Commercial Disputes blog at Cripps Pemberton Greenish. However, this ultimate power does not help a disgruntled shareholder if he or she is a minority shareholder. In this case, the shareholder must invoke one of the following remedies when the majority shareholders control the company through the directors. Shareholders have certain legal rights that may be aid rights. These include the right to consult company directories and to require the company to convene general meetings. Sometimes the exercise of these rights may be sufficient to defuse a dispute when issues are opened and discussed at a shareholder meeting. As a general rule, a shareholders` pact can only be changed by all parties (regardless of the size of their participation), whereas articles can normally be changed by a specific decision (which requires at least 75% of the total votes).
Articles and changes must be registered with Companies House and are publicly available. On the other hand, shareholder agreements are rarely publicly registered. It is argued that a shareholders` pact should be registered, particularly if some of its provisions claim to have priority over articles, but this is rarely done in practice. People often wonder why they need both a shareholder contract and articles, which is a good question. While many provisions may appear in both documents, there are a number of important differences between the documents, which means that both are generally necessary: a shareholder pact often provides that an outgoing director owning shares must offer his shares to other shareholders at a certain price. A breach of the shareholders` agreement may occur due to a number of circumstances, but it actually occurs when action contrary to the terms of the agreement is taken. This could be the case when a shareholder decides to sell some of the most important assets of a company without proper authorization or if shares are transferred in a manner contrary to the rules established in the shareholders` pact.