Corporate Disputes: High Court Considers Director Removal In Oppression Proceedings

The High Court has examined the circumstances in which an asserted quasi‑partnership may provide a sufficient basis for granting an injunction restraining majority shareholders from removing a director from office.

This is the latest article in our corporate disputes series (with previous briefings available here), in which we examine the High Court's judgment in Ferriter & anor v Gorzow Limited & ors [2025] IEHC 664, delivered following an interim application brought by a minority shareholder and director in the context of ongoing oppression proceedings.

Background

Two minority shareholders of a successful commercial vehicle business (Company) issued oppression proceedings under section 212 of the Companies Act 2014 (2014 Act); one shareholder being a 30% shareholder, co-founder and longest‑serving director of the Company (Applicant) and the other shareholder being a 4% shareholder, who had previously been removed as a director and had his employment with the Company terminated on the basis of alleged gross misconduct.

In June 2025, an EGM was convened to remove the Applicant as a director of the Company on the basis inter alia that his knowledge and/or participation in wrongdoing had raised concerns about his ability to discharge his fiduciary obligations. The Applicant claimed that the purpose of his removal was to inhibit his access to the financial affairs of the Company and to prevent him from raising queries on the alleged redirection of Company business to entities controlled by the majority shareholders. In advance of the scheduled EGM, the Applicant applied to the court for an interlocutory injunction restraining his removal as director pending determination of the oppression proceedings.

Issues Before the Court

When the injunction application came before the High Court, it had to consider the following questions:

• Whether the court should restrain the removal of the Applicant as director, pending the determination of the oppression proceedings;
• Whether the relationship between the parties constituted a quasi‑partnership, giving the Applicant a right to board participation; and
• Whether the test for the granting of an injunction could be met on the facts of the case, namely was there a serious question to be tried, might a permanent injunction be granted after the trial, would damages be an adequate remedy for the Applicant if the injunction was refused and where did the balance of justice lie.

High Court Decision

The High Court held that while the court can order an injunction restraining the removal of a director, this clearly interferes with the statutory provisions of the 2014 Act which recognise the general entitlement of members to remove directors by majority vote. As such, an injunction of this nature should only be granted on an exceptional basis. The mere existence of an underlying claim for oppression, even if entirely stateable, will not of itself entitle a minority director to an order restraining his removal.

Having held that it was permissible, in exceptional circumstances, for the court to restrain the removal of a director, the court went on to consider whether the test for granting an injunction, on the facts of the case, had been met.

• Permanent Injunction: While the outcome of oppression proceedings often involves the purchase of an applicant's shares, it cannot be definitively said that a permanent injunction would not be granted. The court was not willing to interpret the unlikelihood of a permanent injunction at trial as being an absolute bar to obtaining interlocutory relief in all cases alleging oppression.
• Fair Question to be Tried: While there was no 'hard evidence', for example in the form of shareholder agreement, supporting the existence of a quasi-partnership, and a determination of the issue will fall to be determined by the trial judge, the factual circumstances over a 40-year period meant that the Applicant's claim went beyond mere assertion. In this context, the court held that the issue of whether the exclusion of the Applicant from the affairs of the Company constituted oppressive conduct to him as a shareholder or in breach of a quasi-partnership did amount to a fair issue to be tried.
• Adequacy of Damages: The court held that damages would not be an adequate remedy for the Applicant given the loss of real‑time board participation, access to financial information, and reputational harm that would follow his removal as director.

Balance of Justice: The court favors preserving the status quo. While it was accepted that the court should be very slow to impose a director on a company, on the facts, it was not satisfied that irreparable damage would be done to the Company by leaving the Applicant in situ as director pending trial. It noted that while his presence at board meetings may make them increasingly stressful and lengthy for all parties, that is not a reason to exclude him if they can otherwise run to their conclusion and decisions can be taken. The court did emphasise that the Applicant would remain bound by his duty of confidentiality and it might be inappropriate for him to receive certain information where there could be a conflict of interest, in light of the ongoing litigation.

The court granted the interim injunction restraining the removal of the Applicant as a director of the Company. It emphasised the need for the oppression proceedings to progress diligently and allowed the respondents liberty to seek a variation of the injunction, if necessary.

Key Takeaways

• The mere existence of an oppression claim does not automatically entitle a director to an injunction restraining removal.
• This judgment is fact specific and the court emphasised the exceptional nature of any decision to restrain a company from acting under the 2014 Act to remove a director.
• However, while the determination as to whether a quasi‑partnership existed in this case will be a matter for the trial judge, the claim in this case was sufficiently grounded to meet the threshold of a fair question to be tried and allowed for the granting of an injunction.

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