Legal Updates

A shareholder in a company managed as a partnership does not have a right to be employed by the company but has the right to participate in the management

March 6, 2018
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A shareholder of a company that was managed as a partnership was an employee and also a director of the company and was terminated both from the position as an employee and as a director. After termination the computer was taken from her and her access to the company's databases, including financial reports, and books and accounts, was blocked.

The Court accepted the claim and held that in the company managed as a kind of partnership there is a distinction between the expectation of a shareholder to be employed by the company and the expectation of participating in the management or serve as a director.  A shareholder does not have the right to be employed by the company but jeopardizing the expectation to participate in the management or serve as a director may constitute an oppression.  The termination of employment is not oppression, but the termination is an indication of loss of trust between the shareholders in a manner that justifies separation.  Moreover, denying the shareholder's right to receive full information about the company's activity, including access to economic data, while the other shareholders have access to it, constitutes a conscious prevention of the shareholder from receiving information about the state of the company's business in a manner that constitutes oppression.