| Ebrahimi v Westbourne Galleries Ltd | |
|---|---|
| Court | House of Lords |
| Citation(s) | [1973] AC 360, [1972] 2 All ER 492 |
| Keywords | |
| Winding up petition | |
Ebrahimi v Westbourne Galleries Ltd [1973] AC 360 is a United Kingdom company law case on the rights of minority shareholders. The case was decided in the House of Lords.
Contents |
Mr Ebrahimi and Mr Nazar were partners. They decided to incorporate as the business was highly successful, buying and selling expensive rugs.
Mr Ebrahimi and Mr Nazar were the sole shareholders in the company and took a Directors' salary rather than dividends for tax reasons. A few years later, when Mr Nazar's son came of age, he was appointed to the board of directors and Mr Ebrahimi and Mr Nazar both transferred shares to him.
Mr Nazar and son then called a company meeting, at which they passed an ordinary resolution to have Mr Ebrahimi removed as a Director. Mr Ebrahimi, clearly unhappy at this, applied to the court for a remedy to have the company wound up.
The House of Lords stated that as a company is a separate legal person, the court would not normally entertain such an application. However, they believed that as the company was so similar in its operation as it was when it was a partnership, they created what is now known as a Quasi-Partnership.
The company was wound up and Ebrahimi received his capital interest.
Now, the court would dismiss the application for a winding up if there is another remedy available. In hindsight, an appropriate decision would have been for the court to make an order for the company, Westbourne Galleries, to buy Ebrahimi's shares.
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