Oppression Actions: Sections 232 and 233 of the Corporations Act (Cth)

Law Society of the Northern Territory

Geoff Clift

General Principles

Section 232: 4 Distinct Grounds and a Composite Whole

Section 232(d) and (e): Commercial Unfairness Section 232 (d): Independent Ground Objective Test of Unfairness Scope and Aim of Sections 232 and 233 Past Conduct Acquiescence and Consent Self-help Onus of Proof

Board Decisions

Role of Management

When a Court May Intervene

Quasi- Partnership Cases

3 Elements Identified in Ebrahimi v Westbourne Galleries Ltd

Implication of a Right to Participate in Management

Unjust, inequitable and Unfair for the Use of Majority Voting Power to Remove the Minority from Management

Circumstances in Which a Right to Participate in Management May be Lost

Relief May Only be Granted Where Participation in Management Affords a “Return for Investment”

Management Fees and Payment of Dividends

”Ripping off” the Company

Independent Advice on Management Fees

Dividend Policies

Management Fees as De Facto Dividends

Share Issues

Purpose of the Share Issue

When Dilution of the Voting Power of the Minority via a Share Issue May be Permitted

Litigation Costs

When Payment by the Company of Legal Costs Incurred by the Majority in Defending Proceedings May Constitute Oppression

Considerations which Militate Against a Finding of Oppression

Denial of Access to Information

When Denial of Access to Information may Amount to Oppression

Remedies

Plenary Power under Section 233

General Principles Governing the Exercise of Discretion

Winding Up as a Last Resort

The Ordinary Order

Valuation of Shares

Extraordinary Orders

Related Remedies

Section 461 (1) (k)

Section 109 of the Associations Act

Conclusion and Questions

Claims against Creditors and Directors by a Company in Liquidation

Law Society of the Northern Territory

Guy Newton