Minority Shareholder Discounts

Our team will help protect your interests as a minority shareholder when it comes to valuing your shares.

During the sale of shares, the value of minority shareholdings can be discounted and this can be a complex area, so it is wise to enlist the help of legal experts to navigate this issue.

If a minority shareholder wishes to sell their shares, a discount will be applied in most cases to reflect the fact that their shareholding does not enable the owner to control the company.

But if the minority shareholder is being ‘forced’ to sell or is left with no alternative other than to force the majority shareholder to purchase their shares, it may be inappropriate to ‘punish’ the minority shareholder by applying a discount. This issue commonly arises in shareholder disputes concerning small or family run limited companies.

It is important to understand that if a minority shareholder resorts to pursuing legal proceedings against a majority shareholder, they can seek a court order which directs that the shareholding should be bought at full value, without the application of any minority shareholder discount.

Minority shareholder discounts are closely connected with the question of whether the business is a ‘quasi partnership’. Although there are court decisions supporting a general rule that there should be no discount for minority shareholdings unless they were bought at a discount price, courts more commonly hold that the discount should apply unless the shareholder can demonstrate they are a ‘quasi-partner’.

Your problem is our problem, and we can provide the expert guidance you need on the issue of minority shareholder discounts to ensure you reach your commercial objectives.