Amendment to articles to force out minority shareholder held valid

The Privy Council has recently decided that an amendment to a company’s articles of association, designed to force out a minority shareholder, was valid. However, the specific conditions for satisfying the new provision were not met on the facts and therefore the minority could not be removed.

The case (Staray Capital Limited and another v Cha, Yang (aka Stanley) [2017] UKPC 43) involved Mr Chen and Mr Cha who had agreed to pursue a mining project in Canada. They set up a company, Staray Capital Limited, to be the project vehicle. Chen held 80% of Staray’s shares and Cha held the remaining 20%. Both were made directors of the company.