Legal Updates

Raising of capital by a company from its shareholders need be for the benefit of the company, equal and fair to all shareholders

January 13, 2019

To finance a procedure against a minority shareholder of a company, a decision was passed to obligate the shareholders to invest funds.

The Court accepted the motion of the minority shareholder and declared the decision to raise capital invalid. When a company requires funding, the decision from which source to receive the funding is a decision of the company, made by its organs but may be deemed oppressive if the raising is not required for the needs of the company or is not made equally and in a manner fair to all shareholders.  Here the dispute was between the shareholders and not between the company and the minority shareholder and thus company funds cannot be used to finance the proceedings and there is certainly no place to raise funds from the shareholders to that end.