The rights of “indirect” shareholders
The rights of “indirect” shareholders to address minority oppression claims to the Cyprus Courts; L.G. Zambartas LLC break new ground in Cypriot Law.
A recent final Court judgment has been issued by the District Court of Limassol recognising the rights of “indirect” shareholders to address minority oppression to the Court based on section 202 of Companies Law, Cap. 113, in Cyprus.
Section 202 of Companies Law, Cap.113, suggests that a shareholder of a Company could file a petition before the Court, in cases the affairs of the Company are carried out in an oppressive manner against that shareholder or group of shareholders, to request an order to be issued by the Court for the administration of the Company or the buyout of that shareholder’s shares either by the remaining shareholders or the Company itself.
In this particular case, our Senior Litigation Lawyer, Christiana Achilleos, proceeded with the hearing of such a petition filed on behalf of our Client who was the minority shareholder of a holding company ( registered in a foreign jurisdiction ) of the Company registered in Cyprus.
Although the petition was rejected based on other factors, the Court adopted our position, based on English case law on the matter and equity principles, that a minority shareholder of the holding company of the Company registered in Cyprus could file this petition provided that the majority shareholder of the holding company was in control of both the holding company and the Company registered in Cyprus.
No decision has been issued on this point by the Supreme Court of Cyprus or any Court of First Instance in Cyprus; hence the said final Court judgment represents a new legal precedent under Cypriot law.
Our Courts appear willing to apply more relaxed rules in these cases, based on English case law and equity principles, in order to keep up with the modernized needs of our very complicated corporate structures.