LEGAL TRAINER & INSTRUCTOR: CONSTANTINOS CLERIDES
Just completed a 9 hour training course as a Legal Trainer and instructor of 28 legal professionals in their Continuing Professional Training (9 CPDs) on behalf of European Legal Training Center. Special Thanks to all 28 attendees for dedicating 9 hours out of their busy schedules to hear what I had to say on the matter of Managing and Resolving Shareholder Disputes in Cyprus, a subject to which I have had the good fortune to be involved in as a litigation practitioner.
IMPROPER USE OF DIRECTOR'S FIDUCIARY DUTY IN ISSUING SHARES - SHAREHOLDER DISPUTES - COMPANY LAW
In Re Sherborne Park Residents Co Ltd (1986) 2 B.C.C. 99528 Ch (Companies Ct), Hoffmann J held that an action by a shareholder seeking to set aside an improper issue of shares, as in Howard Smith Ltd v Ampol Petroleum Ltd  A.C. 821 PC, was not a derivative claim at all but a personal claim by the individual shareholder who is aggrieved by it (at 99530– 99531):“Although the alleged breach of fiduciary duty by the board is in theory a breach of its duty to the company, the wrong to the company is not the substance of the complaint.
THE RULE AGAINST REFLECTIVE LOSS IN SHAREHOLDER DISPUTES - COMPANY LAW
The rule is that a shareholder, assuming it otherwise has a cause of action as well as the company, cannot recover for loss which is merely reflective of the company’s loss. In the leading case of Prudential Assurance Co Ltd v Newman Industries Ltd (No.2)  Ch. 204 CA (Civ Div), it was stated that a diminution in the value of a shareholding or in distributions to shareholders, which is merely the result of a loss suffered by the company in consequence of a wrong done to it by the defendant, is not in the eyes of the law damage which is separate and distinct from the damage suffered by the company, and is therefore not recoverable. Therefore a shareholder must review other options such as derivative actions or procedures relating to the protection of minority shareholders.
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