Quasi Partnership

In a quasi-partnership, minority shareholders may have greater rights than arm's-length shareholders - which the court may intervene to protect.

This is defined as a company law concept protecting minority shareholders when there is a personal relationship or mutual reliance. Commonly, long-term business partners and family companies will meet this particular description.

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How the court defines a quasi-partnership

There are several factors which the court should consider when determining if there is a quasi-partnership in place. These include:

• An agreement that all or some (there may be sleeping members) of the shareholders will be involved in the conduct of the business
• An association formed or continued on the basis of a personal relationship involving mutual confidence
• Restrictions on the transfer of a member's interest (i.e. on disposal of shares)