Minority Rights

Minority rights are rights granted to shareholders representing a certain percentage of the capital to protect them against the majority. In non-public joint stock companies the percentage is one tenth of the capital, and in public companies one twentieth; the articles may set a lower percentage.

Main Minority Rights

• Calling a general assembly and adding agenda items: The minority may ask the board in writing, stating the reasons and agenda, to call a general assembly or add items to the agenda. If the request is not met within forty-five days, court authorisation may be sought (TCC Art. 411-412).
• Postponing discussion of financial statements: The minority may require discussion of the financial statements to be postponed by one month.
• Special audit: If a special audit request is rejected at the general assembly, the minority may apply to court.
• Dissolution for just cause: The minority may ask the court to dissolve the company for just cause (TCC Art. 531). Instead of dissolution, the court may order another solution, such as purchasing the claimant’s shares at their real value.
• Liability actions and settlement: The company’s waiver of, or settlement on, liability claims against managers is not valid if the minority objects; see Directors’ Liability.

Individual Shareholder Rights

Some rights belong to every shareholder regardless of percentage: the action for annulment of general assembly resolutions, the right to information and inspection and the pre-emptive right are among them.

In Limited Liability Companies

In a limited liability company, shareholders representing one tenth of the capital may also call a general assembly and add agenda items. Every shareholder may also bring an action to withdraw for just cause. Shareholders’ information and inspection rights are also broader than in a joint stock company.

In Practice

Minority rights usually come into play once a dispute begins. Investors and minority shareholders regulate additional protections such as veto rights, the tag-along right and board representation in the shareholders’ agreement alongside statutory rights.