Conditions for relief - statutory provisions, Business Law and Ethics

CONDITIONS FOR RELIEF:

In H.R. Harmer Ltd (1959) Jenkins L.J. summarised the conditions which must be met before relief under the section can be granted by the court when he stated that:

(1)   The oppression complained of must be complained of by a member of the company and must be oppression to some part of the members (including himself) in their or his capacity as a member or members of the company as such.

(2)   The facts of the case must not only be those that would justify the making of a winding-up order under the 'just and equitable' rule but must also be of a character which have in them the requisite element of oppression

(3)   Next is the phrase "the affairs of the company that are being conducted" suggests prima facie a continuing process and is wide enough to cover oppression by anyone who is taking part in the conduct of the affairs of the company whether de facto or de jare.

(4)   The word "oppressive" must be given its ordinary sense and the question must be whether in that sense the conduct complained of is oppressive to a member or members as such.  The strict application of these conditions by the English courts rendered the section largely ineffective as a minority protection section and culminated in its repeal by the English Companies Art 1980.  Only the following cases had been successfully brought under the section-                                 

(i)            Re.  H.R. Harmer Ltd (98), and

(ii)          Scottish Wholesale Co-operative Society Ltd v Meyer and Another (97).

The other applications had been dismissed on the grounds of non-compliance with one or other of the prescribed conditions.  No Kenya case appears to have been contested under the section and it is therefore not possible to evaluate the effectiveness of the section as, in Professor Gower's words, "a weapon in the (minority) shareholder's armoury".  The section would conversely be equally ineffective in Kenya if Kenya courts were to adopt the same restrictive conditions that have been postulated by the English courts.

Posted Date: 1/15/2013 2:53:32 AM | Location : United States







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