Conditions for Redemption
The position of a minority shareholder may be quite insecure if his/her economic interests come into conflict with a shareholder or shareholders exercising majority power. The Limited Liability Companies Act provides a minority shareholder with special protective [1.7.3 Regulations Protecting the Shareholders' Rights].
Provisions on redemption of minority shares have been established in order to solve a conflict situation between a minority and majority shareholder. According to the Limited Liability Companies Act, a shareholder with more than nine tenths (9/10) of all the shares of the company and votes to which the shares entitle (redeemer) has the right to redeem the shares of the other shareholders at current price (squeeze-out).
A shareholder whose shares may be redeemed (minority shareholder) has the corresponding right to demand that the shareholder’s shares to be redeemed. The shareholder demanding redemption shall, however, make the redemption claim on all the shares in his/her possession. He/she cannot demand only a portion of his/her shares to be redeemed. The redeemer has nevertheless the right to redeem all the minority shares even though only some of the minority shareholders would have made a redemption claim.
It is not possible to deviate in the articles of association from provisions on redemption right and obligation which aim at protecting minority shareholders. For this reason it is, e.g., neither possible to increase the portion of shares and votes resulting in the redemption obligation nor to decrease the portion of shares and votes entitling the majority shareholder to squeeze-out from what is provided by law.
In addition to the redemption proceedings descripted here, a shareholder may have the right to pursue a redemption proceeding against the shareholder who has misused his/her influence power [1.7.3 Regulations Protecting the Shareholders' Rights].