Cyprus: Minority Shareholders Oppression In Cyprus Companies And Available Remedies

Last Updated: 27 October 2011
Article by Anastasios Antoniou

Cyprus fully recognizes the possibility that minority shareholders in a Company may become oppressed or unfairly prejudiced against on behalf of the controlling or majority shareholders and/or the board of the Company. This article elaborates on the various situations in which either the Company or minority shareholders' interests are harmed by the majority shareholders under Cyprus law and the available remedies in such cases.

1. Minority Shareholders' protection at Common Law

The Rule in Foss v. Hartbottle

The fundamental nature of the rule in Foss v. Hartbottle, an 1843 English case, and the exceptions to the rule judicially developed thereafter constitute the source of Common Law principles relating to the protection of minority shareholders in general. The rule essentially provides that "to redress a wrong done to the company, or to recover money or damages alleged to be due to the company, the action should prima facie be brought by the company itself". The rule therefore places the company as the proper claimant in litigation for a wrong done against it, thus leaving the matter of litigation in such cases to the majority of the board of directors of the company or the shareholders or both. It also emanates from the rule in Foss v. Hartbottle that the courts will not interfere in the internal management of companies.

The Exceptions to the Rule

It is evident that if the said rule was not subject to certain exceptions, a minority shareholder would be barred from litigating over any wrongdoing. As such, the following exceptions to the rule in Foss v. Hartbottle have been formulated (The Supreme Court of Cyprus has very recently upheld the existence of these exceptions):


Ultra vires and illegal acts

Acts that are ultra vires or illegal under statute.


Acts requiring a special majority

Acts for which a special majority (e.g. a special resolution) is required but which are carried out by other means (e.g. an ordinary resolution). An example often faced under this exception is the amendment of a company's Articles of Association by ordinary resolution.


Acts that infringe a shareholder's personal rights

The denial of a personal right is a wrong done to the shareholder in his capacity as such and not to the company. In this exception the company would not be the 'proper claimant' and the proceedings would not constitute a derivative action (see below). It has been clarified that a shareholder cannot bring an action for breach of duty by directors since the latter do not owe their duties to the shareholder but to the company.


Acts of fraud against the minority on behalf of the persons controlling the company

This exception has been held to be the genuine exception to the rule in Foss v. Hartbottle. Under this notion, a minority shareholder, in the absence of any other remedy, can sue when the board uses its powers willingly or not, in a fraudulent manner which benefits the board to the detriment of the company.

In relation to the concept of 'fraud', which must be established for satisfying the fourth exception referred, this has been interpreted widely by Courts and is confined to dishonest behaviour. Within the said context and under the same exception, the element of control also becomes a fundamental component of any action against wrongdoers. In light of the controlling power of wrongdoers (either through shares carrying voting rights or through representing the majority shareholders or through their majority or other means of control in the board itself) an action on behalf of the company would be technically prevented, thus enabling the minority shareholder to sue on behalf of the company. The company is therefore placed, for reasons of formality, as a compulsory defendant, despite the derivative action being raised to protect its own interests.

A derivative action enables the shareholder to enforce a right which is vested in the company, essentially suing its directors for breach of duty. The shareholder is suing as agent of the company on behalf of the company and damages recovered will go to the company.

As such, a derivative action can essentially be raised in relation to the fourth exception only, i.e. fraud on the minority. On the other hand, the third exception removes the applicability of the majority rule of Foss v. Hartbottle altogether, which leads to a clearly personal action.

2. Minority Oppression under statute: Petition under s. 202, Cap. 113

Section 202 of Cap. 113 provides protection to a shareholder against whom the company's affairs are conducted in an oppressive manner. The said statutory section is nearly identical to s. 210 of the long repealed English Companies Act 1948 and as such Cypriot Courts rely heavily on English case-law in exercising their judicial powers in cases of minority oppression under statute.

The conditions that must be satisfied towards invoking the rights provided under s. 202 can be synopsized as follows:

  1. The company's affairs are carried out to the oppression of the minority shareholders;
  2. A Court would be justified to issue an order to wind-up the company on the basis that it would be just and equitable to do so; and
  3. The winding-up of the company would be unfair to the minority shareholders.

Upon satisfaction of the above conditions, the Court may, with a view to' bringing to an end the matters complained of, make such order as it thinks fit, whether for regulating the conduct of the company's affairs in future, or for the purchase of the shares of any members of the company by other members of the company or by the company and, in the case of a purchase of the said shares by the company, for the respective decrease of capital of the company, or otherwise.

Although the legal topic under discussion has not been exhausted by Cypriot Courts, they have nonetheless thoroughly examined it in cases brought before them. Of particular note is the Supreme Court's Judgment in In re Pelmako Developments Limited5, which is most illustrative of the matters discussed in the present Memorandum.

In its Judgment in In re Pelmako Developments Limited, the Court upheld the English judgment in Re Five Minute Car Wash Service Ltd6, interpreting the notion of 'oppression'. It made particular reference to the elements that a claim for minority oppression must contain. Specifically, such claim must:

  1. Concern the rights of the company's members;
  2. Be related to the conduct of the company's affairs;
  3. Make the company's dissolution just and equitable;
  4. Entail an oppression for those members seeking the company's dissolution.

The concept of 'oppression' was judicially developed in English case-law to a considerable extent, most vividly in the House of Lords Judgment in Scottish Co-Operative Wholesale Society Ltd v. Meyer7. It was held that the term entails behaviour which includes lack of probity or lack of fair dealing towards the company's members in relation to their rights as shareholders thereof. On the contrary, inefficiency or negligence in the conduct of the company's affairs does not suffice to evidence oppressive behaviour.

The exclusion of the minority shareholders from the company's management and/or decision-making, in conjunction with the promotion of parallel and conflicting financial activity to those of the company, as well as acts leading to the extraction of the company's assets against the minority shareholders, are the legal grounds supporting a petition to dissolve the company under s. 202 of Cap. 113.

Remedies under s. 202, Cap. 113

Remedies sought under a petition under s. 202 in cases of minority oppression are prescribed by the section itself as being:

  1. A Court Order for the regulation of the future conduct of the company's affairs;
  2. Court Order for the purchase of the shares of any members of the company by other members of the company;
  3. A Court order for the purchase of the shares of any members by the company itself and the respective decrease of the company's share capital.

The present article has identified the conditions under which Minority Shareholders in the Company can seek remedies or restitution for wrongs done to their detriment or to the Company's detriment. Although the Courts are inevitably not willing to interfere in a Cyprus Company's internal affairs, it remains to be seen whether the Courts shall create case law that further prescribes the conditions in which any party may be entitled to the discussed remedies in Cyprus.


1 (1843) 2 Hare 461.

2 As per Lord Davey in Bulrand v. Earle [1902] AC 83, PC, at. 93.

3 As per Jenkings LJ, Edwards v. Halliwell [1950] 2 All ER 1064 (CA)

4 Αιμίλιος Θωμά κ.α. v. Ιάκωβου Ηλιάδη (2006) Πολ. Εφ. Αρ. 11784.

5 (1999) 1B ΑΑΔ 1369

6 [1966] 1 All E.R. 242

7 [1958] 3 All E.R. 66; (1959) A.C. 324.

ANASTASIOS ANTONIOU LLC is a boutique Cyprus Law Firm, committed to the provision of the highest quality of specialized legal service. Our Cyprus Lawyers advise on  Competition Law and  Merger Control Energy Law and  Oil and Gas law Financial Services Law Private Investment Fundsand  Corporate Law. Our  Litigation practice has also been strategically designed to address and resolve issues of conflict arising in all practice areas we are engaged in, thus enabling our Firm to ensure that our Clients receive the full range of legal services, from legal support, advice and drafting to the handling of complex transactions and dispute resolution.

In alignment with the constantly changing and increasingly competitive global environment, our Firm has developed a focus and specialization towards providing comprehensive legal support to particular industries such as the  Energy sector,  Aviation, the EnvironmentIT and e-CommerceTelecommunications  and  Life Sciences.  Find out about all of the  areas we practice the law in as well as the industries  we provide legal support to. Our main priority is to provide the full-range of legal services in relation to our particular areas of expertise, from legal advice and counsel to  litigation.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions