Industry

I. Area of law

Corporations Act 2001

Shareholder’s rights and remedies

Oppression against minority

Directors’ duties

Members’ rights

II. Explain the principles of law

1. Definition of company

A legal entity, allowed by legislation, which permits a group of people, as shareholders, to apply to the government for an independent organization to be created, which can then focus on pursuing set objectives, and empowered with legal rights which are usually only reserved for individuals, such as to sue and be sued, own property, hire employees or loan and borrow money.

2. Shareholder Power

2.1 It is necessary to consider the members’ ability to initiate proceedings against offending director or majority shareholders. If the majority exercises their power bona fide for the benefit of the company as a whole the courts will not intervene to invalidate the resolution. However, in any situation where the rights of the minority are subject to the will of the majority a resolution will be held invalid if it was passed

As we can see in the case Peter’s American Delicacy Co Ltd v Heath (1939) 61 CLR 475, Fraudulently or oppressively or was so extravagant that no reasonable person could believe that it was for the benefit of the company

2.2 Under statutory rights and remedies the likely provision is CA ss232, 233, 234, 461 for oppressive and unfair conduct of the company’s affairs. It provides that a member may seek a remedy where the “affairs of the company” are being conducted in an “oppressive”, “unfairly prejudicial” or “unfairly discriminatory” way.

2.3 Seek Court remedies under s233, (1)  The Court can make any order under this section that it considers appropriate in relation to the company, including an order:

                     (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          (b)  that the company's existing constitution be modified or repealed;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) ...