W and R, the major shareholders and directors of the company had equal rights of managing and voting in the company. They had bitter enemity towards each other, and not speaking to each other. All communications were made through the Secretary. Though the company was making profits, there was a dead lock in the management of the company. What is the remedy to the other share holders?

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  • W and R, the major shareholders and directors of the company had equal rights of managing and voting in the company. They had bitter enemity towards each other, and not speaking to each other. All communications were made through the Secretary. Though the company was making profits, there was a dead lock in the management of the company. What is the remedy to the other share holders?
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Answer:

If the major share holders / directors of the company who have equal rights of managing and voting in the company are not in speaking terms, then it is a dead lock in the management of the company.

   The minority share holders can approach the Court for suitable remedy including winding up of the company.

 

   The same view was held in In Re Yenidji Tobacco Co. Ltd., wherein the Court ordered for winding up of the company, since there was deadlock in the management of the company.

Last Updated On January 31, 2018
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