Shareholder Oppression

Shareholder oppression – the early warning signs

The usual definition of shareholder oppression (Oppression) is something that occurs when a majority of shareholders in a company misuse their power to oppress minority shareholders.  That said oppression is not limited to situations of majority and minority, it can occur when the disputants have equal shareholding  but there is an imbalance of control (or power) caused by a variety of statutory and contractual controls that were agreed to at the start of the relationship. [Read more…]

Just and equitable winding up for shareholder oppression

In matters involving the oppression of minority shareholders by the majority the usual legal remedy is to pursue relief for oppression as contained in sections 232 and 233 of the Corporations Act 2001 (Cth)(Act). However section 233(2) of the act also allows for an aggrieved party to seek an order winding up the company on just and equitable ground as if the order were made under section 461.  Section 233(2) represents the intersection of the just and equitable winding up and shareholder oppression. [Read more…]

Director misappropriating funds found to be oppressive

Shareholder oppression usually occurs when a majority shareholder(s) misuses their power to oppress the minority shareholder(s).   The test for “oppression” is an objective one and is contained in Section 232 of the Corporations Act 2001 (Cth) (Act).   For instance, where a director is found to have breached their fiduciary duty because they have misappropriated funds or assets this can be considered as being oppressive conduct.  This was the case in Martin v Australian Squash Club Pty Ltd (1996) 14 ACLC 452 (Martin) when an executive director misappropriated and misused company funds and assets and was held to have breached his fiduciary duties. [Read more…]

Shareholder oppression – valuation issues

Shareholder oppression or minority shareholder oppression can occur when the majority (shareholder(s)) in an entity misuse their majority to oppress or control the minority shareholders.  There are is not a limited number or combination of activities which the majority may engage in to oppress the minority, sometimes referred to as “sharp practice” or “board room tactics”, the possibilities are almost infinite. [Read more…]

Shareholder oppression – Victorian Supreme Court adopts pilot program to resolve oppression claims

On 1 October 2014 (Commencement), the Victorian Supreme Court commenced a pilot program to deal with applications under section 232 of the Corporations Act 2001 (Cth) (Act).  Practice Note No. 5 of 2014 (Practice Note) describes the new process for dealing with applications to Court seeking relief under section 233 of the Act.  The Practice Note states that the Court will operate a six (6) month pilot program (Program) to deal with oppression actions, for the stated aim of “just, efficient, timely and cost-effective resolution of the real issues in dispute”.

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Shareholder oppression

What is shareholder oppression?

Shareholder oppression can occur when the majority shareholders in a company misuse their power to oppress the minority shareholders.

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Top 7 mistakes made in Shareholders’ Agreements

Shareholders Agreements’ or “Business Wills” as recently referred to by Paul Betti of Australian Financial Advisers, are commonly created at the beginning of a business venture.  They attempt to regulate the conduct of the shareholders who are establishing a new venture and apply not only to Pty Ltd Companies, but to Partnerships and other commercial entities.
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