Shareholder Disputes - Oppression

Oppression proceedings are governed by section 232 and 233 of the Corporations Legislation and typically applies where the company's business is being conducted in a manner that is prejudicial or discriminatory against a shareholder such as when: –

• a shareholder is being excluded from the management company
• those who manage and run the company give themselves salary increases at the expense of the overall shareholders i.e. there is excessive remuneration
• minority shareholders are being denied information concerning the company.

Section 1337B(2) of the Corporations Act confers jurisdiction on the Supreme Court of each State with respect to civil matters arising under the Corporations legislation. One species of such matters is an application under Pt 2F.1. Section 234 identifies who can apply for an order; s 233 describes the orders that a court can make; and s 232 identifies the grounds for making an order under s 233. Section 232 provides:

"The Court may make an order under section 233 if:

(a) the conduct of a company's affairs; or

(b) an actual or proposed act or omission by or on behalf of acompany; or

(c) a resolution, or a proposed resolution, of members or a class ofmembers of a company;

is either

(d) contrary to the interests of the members as a whole; or

(e) oppressive to, unfairly prejudicial to, or unfairly discriminatoryagainst, a member or members whether in that capacity or in anyother capacity.

For the purposes of this Part, a person to whom a share in the companyhas been transmitted by will or by operation of law is taken to be amember of the company."

Section 53 of the Corporations Act gives an expanded identification of the"affairs of a body corporate" for a number of provisions of the Act, includings 232. In particular, the affairs of a body corporate include "the promotion,formation, membership, control, business, trading, transactions and dealings" ofthe body and "the internal management and proceedings of the body".

If one or more of the grounds identified in s 232 of the Corporations Act is established, the Court is empowered by s 233(1) to "make any order under this section that it considers appropriate in relation to the company". Ten species of order are identified – ranging from an order for winding-up to an order restraining a person from engaging in specified conduct or from doing a specified act, or requiring a person to do a specified act. One particular species of order that the court may make is an order "for the purchase of any shares by any member" - Campbell v Backoffice Investments Pty Ltd [2009] HCA 25.