It is not uncommon for interpersonal conflicts to disrupt the boardroom and cause damage to an otherwise successful business. The potential for conflict is heightened in closely-held companies featuring small groups of shareholders connected through bonds of family or friendship, where adequate protection for minorities in shareholder agreements is often absent.

In this five-part series of guides, we look at:

  • an introduction to shareholder oppression;
  • issues around "quasi-partnerships" and the impact on disputes;
  • the extent to which court hearings can be heard in private;
  • how a minority shareholding is valued for the purposes of a buy-out (the most common resolution); and
  • the tax implications of a buy-out.


A "freeze out" occurs where the majority withhold information and exclude the minority from participation in the management of the company. A "freeze out" can often be accompanied by a termination of employment or demotion.

A "squeeze out" occurs where the majority seek to force the sale of a minority interest back to the majority at an unfair price. In closely held companies the minority do not have a market into which they can sell their shares, and absent appropriate terms in a shareholders' agreement, can be faced with significant pressure to exit at a financial loss. A "squeeze out" can be accompanied by a prejudicial redistribution of the economic benefits of membership through divesting reward away from the payment of dividends to other forms of remuneration that exclude the minority.


  • Tackle conflict head on and early to avoid escalation.
  • Skill training in managing disputes and negotiations benefit the business and can help diffuse disputes in the boardroom itself. Good corporate governance can be a preventative:

    • Clarify roles of management at the board with certainty.
    • Ensure open and orderly information flows.
    • Foster a culture of frank discussion and collaboration.
    • Focus on building a consensus approach to decision making.


When a disagreement occurs, minority shareholders can soon find themselves vulnerable to attempts by the majority to either "freeze" or "squeeze" them out of the company.


In the absence of adequate minority protection in a shareholders' agreement, often the only remedy is to seek the assistance of the Court.

To initiate an oppression action, the minority must issue proceedings against the majority shareholders and generally the company also.

This can be a daunting task for an individual shareholder who has not been involved in litigation previously and who will be concerned of the risk of incurring material costs with no certainty of a return. In this context, it is important to seek advice early on in the dispute process. Following an initial diligence, it should be possible to provide an assessment of the merits of the oppression case and the likely costs and risks associated with taking an action.

It is often advisable to seek to enter the proceedings into the Commercial List of the High Court which provides a fast tracked judge-managed process and allows the case to proceed more quickly.

Irish law provides a remedy to any shareholder that can establish that the affairs of the company are being conducted, or the powers of the directors are being exercised:

  • in a manner oppressive to him or her or any of the shareholders, or
  • in disregard of his or her interests as shareholders.

In addition, the minority must satisfy the Court that the conduct complained of was "harsh, burdensome and wrongful". This is an objective test and the minority's view of the nature of the conduct is irrelevant.

The Court has a wide discretion to make any order it sees fit to bring an end to oppressive conduct, including orders:

  • requiring a buy-out;
  • directing or prohibiting any act or cancelling or varying any transaction; or
  • regulating the conduct of the affairs of the company in the future.

In the extreme a Court can make an order winding up the company, but the most common order is for a buy-out.


As the practical solution for both parties is generally a buy out, there is often scope for early settlement if agreement can be reached on the appropriate valuation. Mediation can prove a useful tool for agreement. Oppression proceedings can be extremely disruptive to a business, both in negative publicity generated (if ventilated in public) and in managing day to day operations under the cloud of a dispute. Focus on obtaining early settlement can prove mutually beneficial.


  • It is often advisable for the minority shareholder who is involved in management to continue to participate in the business as normal (while legal action is threatened or ongoing) this can;

    • Maintain focus on finding a prompt resolution that ends disruption and returns the company to normal business; and
    • Often generate examples of continued attempts of exclusion from management, which will assist the case.
  • Great care should be taken by the majority to manage interactions and avoid improving the minority's case.
  • Communications between the board should be considered by the legal team in advance. It can be mutually beneficial to agree to record key board meetings to ensure an accurate record and maintain professionalism.


Often acts of oppression appear perfectly lawful and involve the exercising of legal entitlements of the shareholders and directors (in the Companies Act, the company's constitution and/or shareholder agreements). This can leave a minority shareholder unable to point to a clear breach of his/her rights, and allows the majority to build a narrative that shields against the complaints raised.

However, in particular, if it can be established that the company operated as a "quasi-partnership" then broader equitable principles can be introduced to enable a court to find otherwise lawful actions oppressive. In our next article we will look more closely at the existence of a "quasi-partnership" in establishing oppression.

This article contains a general summary of developments and is not a complete or definitive statement of the law. Specific legal advice should be obtained where appropriate.