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Snapshot

  • Recently, a series of unfortunate events has created unrelenting financial pressure upon corporations, which is playing out through the oppressive conduct of shareholders and directors.
  • Although the Court can make any order that it considers appropriate, relief must be best suited to putting an end to the oppression.
  • When approaching the Court, care must be taken to ensure that the relief sought is supported by the evidence of the oppressive conduct and that the Court is presented with the necessary material to make that determination. Otherwise, the determination may have a devastating impact.

A storm of shareholder disputes, including claims of oppressive conduct under s 232(e) of the Corporations Act 2001 (Cth) (the ‘Act’), has been brewing for some time. Conditions for disputes are rife when greed and/or desperation collide with a lack of corporate governance, opportunities to take advantage and severe breaches of trust. Disputes can arise over breaches of director duties, the management of companies, distribution of dividends or profits, valuation, transfer or sale of shares, and allegations of misconduct, misappropriation or fraud.

A tempest of COVID-19 related issues, such as debt forbearance periods coming to an end, rising interest rates and a looming recession, have increased the number of disagreements between shareholders and company directors regarding the management of companies. That, in turn, has resulted in allegations of the conduct of the company affairs that is ‘oppressive to, unfairly prejudicial to, or unfairly discriminatory against, a member or members whether in that capacity or any other capacity’ (s 232(e) of the Act).

This is the eye of the storm. This article will highlight the practical lessons to be taken from recent case law and will resonate with ‘no-frills’ litigators who actively facilitate the just, quick and cheap resolution of the real issues in dispute.

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