Defamation by shareholder

How incredible it is that a single shareholder in a PLC  can cause the company tremendous amounts of financial damage just by using Twitter and other social media. Defamation by shareholders, often disgruntled shareholders, against their own company, is one of the most irrational acts that we have seen in recent years.

In the case of the international gold mining company RRR and its shareholder Gary Carp, the consequences of Mr Carp posting defamation against the company were particularly serious to the company and to the thousands of investors who at one point saw the value of their shares plummeting very sharply.

The company was left with no choice but to issue legal proceedings against its shareholder in order to protect the interest of the rest of its shareholders who were being scared off by dangerous speculation and  by highly defamatory conversations that Mr Carp initiated on various investors’ forums.

This was probably the first ever case in the UK of a PLC suing a shareholder over defamation on internet forums and on Twitter. The dilemma that the company faced,  whether legal action for defamation against a shareholder would be viewed as a bullying act or  whether it would be accepted as an act of protection, appreciated by other investors, was resolved very quickly when following the successful law suit, it received nothing but positive and encouraging feedback from its investors. The investors viewed the initiation of legal proceedings against their fellow shareholder as a demonstration of leadership by the company’s board of directors rather than an oppressive act and their confidence in the company grew.  Read about the case of  legal action against a shareholder instructed by Cohen Davis solicitors here.