In the case of Heeraman v. Cherval & ors [2023 SCJ 513], the Applicant complained that as a minority shareholder he was prejudiced by the acts and doings of the Respondents, who were the majority shareholders and directors. He complained that the acts and doings of the Respondents were oppressive, unfairly discriminatory and unfairly prejudicial and this caused prejudice to him. The Applicant claimed compensation of c. MUR 8.3 million from the Respondents or for the Court to order the Respondents to acquire his ordinary shares for that sum.
The action was brought under section 178 of the Companies Act. Section 178(1) provides as follows:
“Any shareholder or former shareholder of a company, or any other entitled person, who considers that the affairs of a company have been, or are being, or are likely to be, conducted in a manner that is, or any act or acts of the company have been, or are, or are likely to be, oppressive, unfairly discriminatory, or unfairly prejudicial to that person in that capacity or in any other capacity, may apply to the Court for an order under this section.
Section 178(2) provides as follows:
“Where, on an application under this section, the Court considers that it is just and equitable to do so, it may make such order as it thinks fit including, without prejudice to the generality of this subsection, an order –
(a) requiring the company or any other person to acquire the shareholder’s shares; or
(b) requiring the company or any other person to pay compensation to a person; or
(c) regulating the future conduct of the company’s affairs; or
(d) altering or adding to the company’s constitution; or
(e) appointing a receiver of the company; or
(f) directing the rectification of the records of the company; or
(g) putting the company into liquidation; or
(h) setting aside action taken by the company or the Board in breach of this Act or the constitution of the company.”
The Respondents raised preliminary objections that a shareholder is prevented from bringing an action in respect of loss suffered in the form of a diminution in share value by section 174(2).
The Commercial Division of the Supreme Court found that the remedies sought by the Applicant are as provided under section 178(2) and overruled the preliminary objections raised by the Respondents. The Applicant could therefore proceed with his action against the majority shareholders and directors who acted in an oppressive, unfairly discriminatory and unfairly prejudicial manner in the conduct of the affairs of the company and which had caused prejudice to him.
Mannish Ajodah, Partner at Orison Legal, appeared for the Applicant in this matter.