1. The illusion of harmony
Every business begins with hope.
A few people, one vision, and that silent fire that says: “We’ll make it.”
But what no one tells you is that companies don’t fall apart because of numbers — they fall apart because of people.
Ego. Control. Silence. The slow, invisible wars inside the boardroom.
At first, everything feels fair — decisions are shared, success is celebrated.
Then, little by little, power shifts.
One shareholder begins to call more meetings. Another starts controlling the bank account.
And one day, you realize:
You’ve become a minority in the company you helped build.
2. The rule of the majority — and its dark side
In corporate law, there’s a principle called the majority rule.
It means those who hold more shares get more control.
At first glance, it makes sense — it keeps decisions fast, efficient, and democratic.
But here’s the catch:
Democracy can become dictatorship when the majority forgets ethics.
That’s why every modern company law — from Europe to Asia — has a hidden balance inside it:
The majority rules, but fairness protects the minority.
Because businesses, no matter how rich or global, are still built on trust.
And when that trust breaks, the law becomes the last safe place.
3. What happens when the company turns against you
Imagine this:
You own 30% of a business. You co-founded it with two partners.
Suddenly, your name disappears from key documents.
They hold meetings without you.
Decisions are made “in your best interest” — but you weren’t even invited.
That’s when you realize something’s wrong.
You’re not being treated unfairly because you’re wrong.
You’re being treated unfairly because you’re outnumbered.
And that’s where unfair prejudice laws come in — legal shields designed to protect minority shareholders when the majority abuses power.
4. The legal safety net: unfair prejudice petitions
In many countries (like the UK, under Section 994 of the Companies Act 2006), a shareholder can ask the court to intervene if the company’s affairs are being run in a way that is unfairly prejudicial to their interests.
In simple words:
If the people in control are acting unfairly — excluding you, misusing company assets, or breaking unwritten agreements — the court can step in.
This law doesn’t exist to punish success.
It exists to restore balance.
Because fairness in business isn’t about equality — it’s about justice.
5. What the court can actually do
Under Section 996 (and similar laws worldwide), the court has broad powers to fix what’s broken.
It can:
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Stop the company from continuing unfair behavior;
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Force the company to take an action it was avoiding;
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Let someone bring legal action on behalf of the company;
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Block harmful changes to company rules;
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Or — the most common — order one side to buy the other out.
That last remedy, the buyout order, is the legal version of a breakup.
The court says:
“You two can’t run this business together anymore. One of you must leave — but fairly.”
6. The hardest part: how to price fairness
Here’s where things get messy.
If the company is listed, you can check the market price of your shares.
But most real-life businesses — family companies, startups, private firms — have no public price.
So how do you value the shares of someone being forced out?
Usually, an independent valuer is appointed — someone neutral.
And most of the time, the court prefers pro rata valuation, meaning:
If you own 40% of the company, your shares are worth 40% of the total, without discounts.
Why?
Because you didn’t choose to sell.
You were pushed out, and the law respects that unwillingness.
But if your role was just an investor, not a partner in management, a discount might be fair.
It recognizes that you had no control and took that risk from the start.
7. When fairness fails: the “just and equitable” ending
Sometimes, the company is too broken to fix.
No buyout, no trust, no future.
That’s when the court can dissolve it under what’s called the “just and equitable” ground — a principle found in the Insolvency Act 1986 and many similar international laws.
It means:
“When fairness can’t repair it, justice will end it.”
This remedy is inspired by partnership law — where two partners who can’t stand each other anymore can dissolve their business.
Common reasons include:
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The purpose of the company no longer exists;
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There’s been fraud or deception;
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There’s deadlock — constant fighting, no decisions;
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There’s loss of trust in leadership;
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Or someone has been unfairly excluded from a small, trust-based company.
example:
Three men turned their partnership into a company. Later, one was voted out legally — but unfairly.
The court said:
“Even if it’s legal under the company’s rules, it’s not fair under equity.”
And it ordered the company to be wound up.
Because in business, legality isn’t always morality.
8. The “clean hands” principle — fairness goes both ways
If you ask for fairness, you must act fairly too.
Courts will deny help if you caused the breakdown.
If you acted dishonestly, disloyally, or destructively, you can’t hide behind “justice.”
The law looks for integrity, not perfection.
It protects those who acted in good faith, not those who use it as a weapon.
9. Winding up: the final weapon
Ending a company is like ending a marriage.
It affects employees, suppliers, families, entire communities.
That’s why it’s the last resort — the nuclear option.
Section 125(2) of the Insolvency Act says the court can refuse to wind up a company if the petitioner has other reasonable options, such as:
Only when all other doors are closed will the court open the final one — dissolution.
example:
When two sides couldn’t even agree on how to value shares, and trust was completely gone, the judge said,
“There’s nothing left to save.”
And the company was wound up.
10. Lessons for real entrepreneurs
Whether you’re in London, Tokyo, Singapore, or Milan — the story is the same:
Power corrupts faster than profit grows.
Here’s what every entrepreneur should remember:
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Write shareholder agreements early. Include exit rules, valuation methods, and decision rights.
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Never rely only on friendship. Trust is gold, but contracts are armor.
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Respect minority voices. Today they’re small. Tomorrow they might be your best defence.
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Don’t abuse control. The law watches quietly — until it doesn’t.
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Fairness is global. Even in different legal systems, the principle is universal: Equity limits power.
11. The deeper truth
Every business is a mirror of human nature.
It reflects how we deal with power, greed, betrayal, and forgiveness.
The law doesn’t exist to make companies moral — it exists to remind us what morality costs when ignored.
Because in business, as in life:
Power can make you win.
But fairness — fairness lets you sleep.
Sometimes, the hardest part isn’t losing your shares — it’s losing your belief that people would do the right thing.
But if you ever find yourself pushed out, remember:
The law may take time, but it remembers fairness.
And when the company you built forgets who you are — justice will remind them.
Q1: What is the main purpose of unfair prejudice laws in corporate law?
To protect minority shareholders from abuse by the majority.
To allow the majority to always overrule minority shareholders.
To punish unsuccessful companies.
Q2: What is usually the last resort if fairness cannot restore a company’s functioning?
Winding up or dissolving the company.
Asking shareholders to invest more money.
Ignoring the dispute and continuing business as usual.
Q3: Why does the law prefer independent valuation when a shareholder is forced to sell their shares?
To ensure fairness and prevent the majority from undervaluing minority shares.
To increase the profits of the majority shareholders.
To punish the minority shareholder for disagreements.
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