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Law Notes Business Associations Notes

Shareholders Remedies Oppression Updated Notes

Updated Shareholders Remedies Oppression Updated Notes

Business Associations Notes

Business Associations

Approximately 289 pages

These are comprehensive yet succinct notes. They set out the relevant legal principles, and material facts from a range of cases in order to demonstrate how those legal principles have been applied.

At the beginning of each document on each topic, there is a table of contents (hyperlinked so you can navigate easily through the document), and also an 'exam checklist', which you can use during revisions or exams to remind yourself of the key issues you have to address.

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BA 17- 18 Shareholders remedies

Table of Contents

BA 17- 18 Shareholders remedies 1

Shareholders Remedies checklist short 3

Checklist long 4

Shareholders Remedies long notes 5

1. Personal actions? under contract, s 140 CA, other statute, equity? 5

(a) Statutory contract in constitution? S 140 5

(b) Other statutory rights: eg injunctions to stop contraventions of CA; class right variations; misleading and deceptive conduct 6

(c) Proceedings for rectification of share register 7

(d) Non-categorical fiduciary duty between directors to individual shareholders? Coleman v Myers; Brunninghausen (Rare) (struck out in Chapman 7

(e) Nature of a derivative suit for vindication of corporate interests (Ngurli) 11

(f) Against co and its directors to restrain acts in breach of their fiduciary duties (Ngurli) (* where allotment and dilution of voting power: Residues) 11

(g) Sue company for breach of equitable limitations upon majority’s voting powers: (1) affirming appropriation of co’s property (2) releasing directors’ duties of good faith and (most importantly):* (3) altering co’s constitution to prejudice shareholders rights* 12

*(3) SR to alter constitution when it prejudices shareholders rights – invalid for infringing equitable limitation by being for an improper purpose or oppressive? (Gambotto)? 14

CB: Coleman v Myers 18

CB: Greenhalgh v Ardene Cinemas - special resolution changing constitution to remove prohibition – constitution prohibited sale of shares to non-members where members willing to purchase – not impeached 18

CB: Australian Fixed Trusts v Clyde Industries - disenfranchisement of members – discriminated against custodian trustee shareholders - impeached 18

CB: Gambotto v WCP – altered constitution – allowed compulsory acquisition of shares at price (that was fair in facts) – not a proper purpose 19

2. Statutory Derivative Action: ss 236, leave reqs under s 237 (ss 236-242) (Swansson; Chapman; Oates; Charlton) 21

CB: Swansson 27

CB: Oates 29

3. Shareholders oppression ss 232 – 235 (Wayde; Re G Jeffreys; Thomas; SPargos Jenkins; 45 Flers; Coombes) 30

(1) Who can apply? Under s 234 member or former member 31

(2) Reqs for making order? (a) ‘Conduct of company’s affair’ or actual or proposed action, or resolution or proposed resolution, + (b) oppressive/unfair/prej/discrim 31

2a Conduct of company’s affairs: (Def in s 53) / action / resolution 31

2b. Conduct contrary to interests as a whole or oppressive, unfairly prejudicial/ discriminatory against member(s) (Wayde; Re G Jeffreys; Thomas; Spargos; Jenkins; 45 Flers; Coombes) 32

(3) Remedial orders under s 233; (very broad powers; Spargos to end oppression (Campbel) 34

(4) Person then has to lodge order with ASIC under s 235 35

CB: Wayde v NSW Rugby League 35

CB: Jenkins – oppressive – shareholders in GM ratified it - 36

CB: Thomas v H W Thomas 37

4. Winding up: on s 461 grounds, s462; Ebrahimi v Westbourne; Re Tivoli 38

(i) Just and equitable ground for winding up: s 461(1)(k); Re Tivoli Freeholds ; Ebrahimi (ASIC can also apply for leave for an order on this ground: s 459A, 459P 39

(ii) Directors acting in own interests or unfairly to members (objective test) s 461(1)(e); Re Cumberland Holdings 42

(iii) Co’s affairs, or acts/resolutions are oppressive or unfairly prej or unfairly discriminatory to members or contrary to intersts as a whle: s 461(1)(f) and (g) 43

• Note on insolvency 43

A. Voluntary admin (directors resolve under s 436A) 43

B Receivership 45

C Scheme of Arrangement 46

D Winding up 46

Shareholders remedies Appendix 48

Proceedings on behalf of a company by members and others: ss 236 – 242 48

Winding up – s 461 – 462 50

Oppressive conduct of affairs: ss 232 – 235 51

S 53 affairs of company 53

History notes 54

Protection of minority shareholders in overview 55

APPENDIX: 55

Shareholders Statutory Rights: s 140, 1324, 1041H and ASIC Act s 12DA 55

Effect of constitution and replaceable rules: 140 55

Injunctions: s 1324 56

Misleading or deceptive conduct (civil liability only): s 1041H CA 57

Misleading or deceptive conduct: s 12DA ASIC Act 58

Intro to these notes

  • These notes cover what remedies the shareholder has towards the company or the directors.

    • Legal standing in respect of wrongs done personally

    • Legal standing in respect of wrongs done to the company

      • General law

      • Statutory derivative action

      • Compulsory liquidation remedies

      • Statutory oppression

    • Equitable remedies – due to the equitable restraints upon the voting power of the majority

Shareholders Remedies checklist short

Can the shareholder:

  1. Sue on personal rights?

    1. Sue on the corporate contract? S 140, Hickman

    2. Other statutory rights: s 1324 (injnction restraining act contravening CA), s 246D (class rights variations set aside if not all members agreeing to it), and misleading/deceptive conduct: 1041H; s 12DA ASICA (Gwalia)

    3. Proceedings for the rectification of the share register either pursuant to statutory power under s 175 or general law rights (no new rights are conferred by s 175).

    4. Sue on directors’ fiduciary obligation to individual shareholders? Coleman v Myers; Brunninghausen

    5. Proceedings in the nature of a derivative suit for vindication of corporate interests: Ngurli

    6. Proceedings in the nature of a personal action against directors and co for breach of fiduciary obligations: Harlowe’s Nominees; Howard Smit

      1. Allotment and dilution of shares for improper purpose, giving rise to shareholders’ personal right of action: Residues Treatment

    7. Rights from equitable limitation upon majority’s voting rights: ie Unconscientious alteration to the constitution in expropriating the minority’s rights (Gambotto)

  2. Statutory derivative action: under s 236; where leave granted under s 237 (Swansson; Oates; Charlton and Chapman)

  3. Oppression action (ss 232, 233, 234); Wayde General law

    1. Statute

  4. Winding up: on s 461 grounds, s462; Ebrahimi v Westbourne; Re Tivoli

    1. Eg on just and equitable grounds

Checklist long

Issues to consider:

  1. Legal...

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