Shareholder Disputes in Trinidad and Tobago

A shareholder holds 30 per cent of a family company. The dividends stop; board meetings take place without notice and decisions arrive as done deals. Then the company's best contracts start turning up in a new business – one owned by the other side of the family.

Each problem has a different answer under the Companies Act, Chapter 81:01. Some are wrongs done to the shareholder; one is a wrong done to the company itself. The choice of claim at the start fixes what the court can order at the end.

Being shut out of the company

Section 242 is the main tool in shareholder litigation in Trinidad and Tobago. It lets the court step in when a shareholder is treated in a way that is "oppressive or unfairly prejudicial" or that "unfairly disregards" their interests. The conduct can be the company's own acts, the way its business is run or the way the directors use their powers.

Standing is wide. Current and former shareholders can apply, as can directors, officers and anyone else the court accepts as a proper person (section 239). A shareholder squeezed out last year can still sue.

The remedy's strength is the range of orders. The court may make "any order it thinks fit", and the Act names the usual ones.

A buy-out. The company or another person can be ordered to buy the shareholder's shares. This is often the cleanest exit from a broken relationship, although a company cannot be made to pay if the purchase would leave it unable to meet its debts.

Undoing a transaction. A contract or deal can be varied or set aside. The court can add compensation where it is due.

Changing how the company is run. The court can appoint directors or amend the articles and bye-laws. It can regulate the company's affairs from then on.

Ending the company. Winding up is on the list too. It is the last resort.

Three rules favour the claimant. The majority cannot defeat the claim by voting to approve the conduct; once started, the claim cannot be settled or dropped without the court's approval. The court can also make the company pay the claimant's legal costs while the case runs. In 2006 the Court of Appeal upheld an order of that kind in Motor and General Insurance Co Ltd v Sanguinette.

In 2017 the High Court upheld an oppression claim in Dallas Corporation v Alnando Corporation and gave judgment for the claimants. Many claims still settle, and the choice between pressing on and negotiating follows the same logic as any commercial dispute heading for court.

When the loss belongs to the company

Some wrongs are not done to the shareholder at all. When a director diverts contracts to a business of their own, it is the company that loses the profit and the company that owns the claim.

The company rarely sues its own directors because they control it. Section 240 solves this by letting a shareholder sue in the company's name with the court's permission, known as leave. The court must be satisfied of three things.

Notice. The directors were given reasonable notice of the application and did not act themselves.

Good faith. The shareholder is acting in good faith.

The company's interests. The claim appears to be in the interests of the company.

Once permission is granted, the court can decide who runs the case and make the company pay the shareholder's reasonable legal fees. It can even order damages paid straight to the shareholders. That matters where paying the company would only return the money to the people who took it.

When trust has gone completely

Sometimes nothing is left to repair. Section 355 lets the court wind up a company where it is "just and equitable" to do so. A shareholder can petition if the shares were first allotted to them or came to them on a death. Anyone else must have held them for at least 6 of the 18 months before the winding up begins.

The court will usually make the order. It can refuse where another remedy exists and the shareholder is unreasonable to insist on winding up instead. In practice the petition is often leverage; the prospect of a company being wound up tends to concentrate minds on a buy-out.

The view from the other side

Directors and majority shareholders facing a claim have a different problem. An oppression claim can slow decisions, put the company's records before the court and leave the company funding the claimant's legal costs.

These fights can also outlast everyone's patience. The Mora Ven shareholder litigation, where counsel at Caribbean.law acted for Dr Persad and his firm, took 13 years to reach a consent order. Freezing relief over the assets stayed in force until the consent order lifted it. For a defendant, the useful early question is which exit the court would most likely order; that is usually the shape a settlement takes.

Frequently asked questions

Can a former shareholder bring an oppression claim in Trinidad and Tobago? Yes. Section 239 of the Companies Act lets former shareholders, directors and officers apply. A shareholder who has already been pushed out is not shut out of the remedy.

Can the court make the majority buy my shares? Yes. Section 242 allows the court to order the company or another person to buy them. The company is protected if paying would make it insolvent; another shareholder can still be ordered to buy.

Do I need permission to sue on the company's behalf? Yes. Under section 240 the court must grant leave first. The shareholder has to show notice to the directors, good faith and a claim in the company's interests.

For a shareholder, the first decision is which wrong has happened. For the company and its directors, it is which order the court is likely to make. The same Act answers both questions, and the answers shape the first letter either side sends.