A minority shareholder in a company who was the driving force behind the company refused to be diluted due to a required infusion of funds by the majority holder and threatened that if diluted will cease to be involved in the company and the company will collapse. The shareholders also updated a counterparty of the company on the shareholders dispute.
The Court held that a shareholder, including a minority shareholder, is obligated to act in good faith and generally accepted manner in exercising its rights and fulfilling its duties as a shareholder, and to avoid the misuse of its power in the company. The duty applicable to the minority shareholder is lower than that which applies to the controlling shareholder. An approach of the shareholder to a counterparty of a company transaction and threats that any dilution will result in the shareholder's ceasing to be involved and the company's collapse are a breach of the duty.
Notwithstanding this, compensation will be granted to a corporative plaintiff only upon proving financial loss and in this case the company failed to do so and thus was not afforded any compensation