Sections 149 to 151 of the Companies Act 1997 complete the shareholder’s toolkit — this time against the company itself.
Section 149 — the personal action
A shareholder of a company may bring an action against the company for breach of a duty owed by the company to him as a shareholder.
Many, and most are statutory. Among them:
- to maintain the share register and register transfers (ss 65, 67);
- to send a share certificate and statement of rights within one month (s 75);
- to provide a statement of rights on request (s 90A);
- to offer new shares in accordance with pre-emptive rights (s 45);
- to call the annual meeting and give proper notice (ss 101, 102; Schedule 2);
- to send the annual report (ss 209–212);
- to permit inspection of records and supply information (ss 216–219); and
- to purchase shares where a valid buy-out notice has been given (ss 91–93, 99).
Above all, the constitution is binding as a contract between the company and each shareholder under section 32(1)(a) — so a breach of the constitution is itself a breach of duty owed to the shareholder.
Section 149 does not contain the express bar found in section 147(2). But the same logic governs: a claim that in substance seeks to recover a fall in share value caused by a loss to the company is not a claim for breach of a duty owed to the shareholder as a shareholder. The route for company losses remains a derivative action under section 143.
Section 150 — an order requiring the board to act
Notwithstanding section 149, the Court may, on the application of a shareholder, where it is satisfied that it is just and equitable to do so, make an order requiring the board to take any action that is required to be taken by the constitution or this Act — and may grant such other consequential relief as it thinks fit.
Section 150 is the company-facing twin of section 148. Section 148 orders a director to act; section 150 orders the board. Both dispense with the requirement that the duty be owed to the shareholder personally, and both turn on what is just and equitable.
| Provision | Who is ordered | Who may apply | Limit |
|---|---|---|---|
| s 142(1)(b) | Any person required to do something by the Act or constitution | Company, director, shareholder, entitled person, Registrar | Not available for completed conduct; no undertaking as to damages required |
| s 148 | A director | A shareholder | Court must find it just and equitable |
| s 150 | The board | A shareholder | Court must find it just and equitable |
| s 104 | Orders a meeting to be held and conducted as directed | Director, shareholder or creditor | Impracticability, or the interests of the company |
Section 151 — representative proceedings
Where a shareholder brings proceedings against the company or a director, and other shareholders have the same or substantially the same interest in relation to the subject-matter, the Court may appoint that shareholder to represent all or some of the shareholders having that interest, and may make such order as it thinks fit, including an order —
(a) as to the control and conduct of the proceedings; and
(b) as to the costs of the proceedings; and
(c) directing the distribution of any amount ordered to be paid by a defendant among the shareholders represented.
Section 151 avoids a multiplicity of identical claims. It applies to proceedings against the company or a director, so it covers both section 149 and section 147 claims.
Paragraph (c) is the practical heart of it: the Court can direct how a single award is distributed among the represented shareholders, which is what makes an aggregate claim workable. Paragraph (b) lets the Court settle costs at the outset — important where the representative shareholder is funding the litigation for the group.
The test is “the same or substantially the same interest”, so the class must be genuinely aligned. Shareholders in different classes, or whose complaints differ in substance, may need separate proceedings — or may constitute different interest groups for other purposes of the Act.
Choosing and running the claim
- Identify whose loss it is. A company loss goes to a derivative action; a personal loss to sections 147 or 149.
- Ask whether you need money or action. If action, sections 148, 150 or 142 are quicker and cheaper than damages.
- Move before the conduct is completed if you want a section 142 injunction — and note there is no undertaking as to damages required.
- Consider section 152 as well. It is the widest remedy, it covers former shareholders and entitled persons, and its orders include requiring the company or another person to acquire your shares.
- Gather the documents first using sections 216 and 219, or a section 220 investigation.
- Group the claims under section 151 where others are similarly affected, and ask for costs and distribution directions at the outset.
Sources
- Companies Act 1997 — ss 32, 45, 65, 67, 75, 90A, 91–93, 99, 101, 102, 104, 141–152, 209–212, 216–220; Schedule 2
Before relying on anything here, read the current text of the Companies Act 1997 and check for later amendments. If a decision matters to you, get advice — start with the Office of the Public Solicitor, or find a firm in the law firms directory.