Comparative Company Law: Shareholder Duties and Appraisal Rights

This set of flashcards covers comparative company law concepts including fiduciary duties of majority and minority shareholders, case law from the UK and Delaware, and statutory appraisal rights in Germany and the US.

Menier v. Hooper's Telegraph Works

An early UK case concluding that majority shareholders cannot divide company assets among themselves to the exclusion of the minority, which is described as "fraud against the minority."

Section 994 of the Companies Act 2006

The UK statutory provision regarding "unfair prejudice," used by courts to police the actions of majority shareholders against the minority.

Duty of Loyalty (Delaware)

A fiduciary duty explicitly recognized by Delaware courts as being owed by controlling shareholders to the minority, as seen in cases like Lynch Communications.

Sinclair Oil Corp. v. Levien

A case where a majority shareholder's decision to force a company to pay dividends was valid, but causing a subsidiary to not enforce a contract with the parent was found to violate fiduciary duty.

Girmes decision

A BGH decision regarding whether a minority shareholder must, under some circumstances, comply with a fiduciary duty in the exercise of their voting rights.

Foss v. Harbottle

A legal principle stating that the company is the proper plaintiff in a suit, though exceptions exist when the majority shareholders are the wrongdoers who have taken the minority's property.

In Re Linotype

A German case (BGHZ 103, 184) involving a majority shareholder holding $96\%$ of the share capital who voted to dissolve a corporation to absorb its manufacturing division.

Appraisal Rights

The right of a dissenting minority shareholder to be bought out at a fair price, providing a liquidity function that encourages investment in private firms.

$$8 \text{ Del. C. } \S 262$$

The Delaware statute that provides appraisal rights for shareholders who vote against a merger and hold their shares until the filing of the suit.

UmwG (Umwandlungsgesetz)

German law providing appraisal right proceedings for shareholders when a surviving entity has a different legal form or a listed company merges into an unlisted one.

Spruchverfahren

A German appraisal suit that must be filed within three months after a resolution on a transaction to contest the exchange payment.

Section 900(2)(e) CA 2006

A UK legal provision allowing courts to provide for persons who dissent from a compromise or arrangement, often resulting in an order for a fair price payment.

$$8 \text{ Del. C. } \S 271$$

The Delaware statute governing the sale, lease, or exchange of all or substantially all of a corporation's assets, which requires a stockholder vote.

Katz v. Bregman

A Delaware case where a shareholder sought to enjoin the sale of a subsidiary that constituted the corporation's entire business operation in Canada.