If you are a minority shareholder and feel excluded, unfairly treated, or forced out of a business, you may have grounds to bring a claim under Section 232 of the Corporations Act 2001 (Cth) which prohibits conduct that is oppressive, unfairly prejudicial, or discriminatory against a minority shareholder.
At Heathfield Grosvenor Lawyers, we advise minority shareholders, directors, and investors in resolving oppression disputes and protecting their rights under Australian law.
What is Shareholder Oppression?
Shareholder oppression occurs where a company’s affairs are conducted in a way that is oppressive, unfairly prejudicial, or discriminatory toward a shareholder or group of shareholders.
This can arise even where the conduct appears technically lawful, but is commercially unfair.
Common Examples of Oppressive Conduct
Each case turns on its own facts, however some common examples of oppressive conduct include:
- Unfair exclusion from management or decision-making
- Denial of access to financial or other information to which the aggrieved party is entitled
- Paying excessive salaries to majority shareholders or otherwise misappropriating funds
- Issuing shares to dilute your interest
- Withholding dividends unfairly
- Forcing a sale of shares below fair value
Your Rights as a Minority Shareholder
Under s.233 of the Corporations Act, minority shareholders can apply to the Court for relief where conduct is oppressive, unfairly prejudicial, or discriminatory.
The court can make any order that it considers appropriate in relation to the company, including, without limitation:
(a) that the company be wound up;
(b) that the company‘s existing constitution be modified or repealed;
(c) regulating the conduct of the company‘s affairs in the future;
(d) for the purchase of any shares by any member or person to whom a share in the company has been transmitted by will or by operation of law;
(e) for the purchase of shares with an appropriate reduction of the company‘s share capital;
(f) for the company to institute, prosecute, defend or discontinue specified proceedings;
(g) authorising a member, or a person to whom a share in the company has been transmitted by will or by operation of law, to institute, prosecute, defend or discontinue specified proceedings in the name and on behalf of the company;
(h) appointing a receiver or a receiver and manager of any or all of the company‘s property;
(i) restraining a person from engaging in specified conduct or from doing a specified act;
(j) requiring a person to do a specified act.
Speak to a Minority Shareholder Disputes Lawyer
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