Minority Shareholder Rights: Navigating Majority Oppression

In the Egyptian corporate structure, minority shareholders often find themselves vulnerable to "Majority Oppression" where decisions regarding dividends, capital increases, or executive compensation are made solely for the benefit of the controlling block.

The Right to Challenge Resolutions

Under Law No. 159 of 1981, shareholders representing at least 5% of the capital can request the competent court to suspend the implementation of General Assembly resolutions that are found to be "prejudicial to the interests of the company" or "unfairly discriminatory" against minority holders.

Common Misconceptions

A common mistake is the belief that minority status means total lack of influence. Egyptian law provides "Derivative Action" rights, allowing minority shareholders to sue board members on behalf of the company for mismanagement, provided the general assembly has refused to do so.

Practical Consequences

Failure to act early against governance abuses often leads to the dilution of shares through unauthorized capital increases. Proactive legal monitoring of board minutes and assembly invitations is the only effective shield for minority interests in Egypt.