Legal Updates

Dismissal of a shareholder from a managerial position in the company does not necessarily constitute oppression

December 30, 2021

A director of a marketing and advertising management company on the Google and Facebook platforms was dismissed from his position as VP in charge of the Google team.
The Court held that although the shareholder keeping his position as a director indicates that he was not oppressed, the shareholders should hold a pricing mechanism regarding his share in the company due to the loss of trust between them. Oppression is a breach of the legitimate expectations of a shareholder, including the right to participate in the management of company affairs, especially when a company is deemed a kind of partnership. However, harming a shareholder in his position as an officer of the company, does not by itlslf amount to oppression. Nevertheless, even when the shareholder is not oppressed but there can be no doubt as to the loss of trust between the shareholders, there may be no choice but to establish a mechanism for separation between the shareholders. Here, although the shareholder was allowed to maintain his position as a director, his dismissal indicates a loss of trust between the parties thus justifying pricing regarding his share in the company.