Two shareholders in a company filed a derivative claim against the third claiming breach of fiduciary obligations and damaging a material transaction of the company for which the company also sued the counterparty. The third shareholder was found liable and compensated the company. The company ceased operation and all it did for many years was legal proceedings against the counterparty with financing by the two shareholders. Upon receipt of funds from the counterparty it distributed only to the two shareholders contenting, inter alia, that the third party disengaged himself from the company during the years of legal proceedings. Money was withdrawn by way of repayment of shareholders loans but also as bonuses and retroactive salaries to the two shareholders on which it was decided in a shareholders meeting, despite objection of the third shareholder.
The Court held that even if the third shareholder was liable for the damage to the company, once compensated he should be treated as any other shareholder. Moreover, even if the shareholder disengaged himself from the company, did not invest in it and it did not matter to him, it does not change his rights as a shareholder. Decisions on bonuses and retroactive salaries are oppression of the minority and are cancelled.