When the company violates their responsibility, exploits their position, and treats the shareholder wrongly, the shareholders can engage an experienced commercial lawyer and use the law to protect their rights. The act that caters to their rights is called the Corporations Act 2001 part 2F 1.
In this, under the section of 234, the outline s232 states that the candidates including in this act are; the company’s shareholders, any individual who was dismissed from the list by selective reduction, any other relevant person declared by the investment commission, any individual who has a share in the company either by will or law, and any person who is no longer the shareholder. Furthermore, the claim is based on the time when they were eliminated.
Shareholders may face oppression in the following conditions:
- Improperly issued shares
- Unprofessional elimination from the management
- Prohibited to access information
- Accused of wasting company funds
- Harsh behaviour of others during the board meeting
- Paying huge amounts of compensation to an associate or controller
- Diversion to another entity of a business
- Unable to take legal actions against any behaviour
Requirement for Resolution
The applicants are provided with help only when the court believes that the conduct of affairs and dismissal done on behalf of the company, or any decision or prospective decision of the shareholders was oppressive to a particular shareholder or was against the interest of a group of shareholders. These affairs may be associated with the company, the shareholders; major or minor, and the directors.
They can be about the association, configuration, endorsement, power, business dealings, profits, legal responsibilities, revenue, trading, assets, internal administration and happening, receipts, outgoings and spending, loses, exercising power and control over those powers, voting rights and power over shares and disposal of shares.
Solutions for Oppressed Shareholders
If the shareholders are able to prove the oppression and misconduct which is against their interest, the court holds all power to take appropriate measures. Such measures are listed on s233 of the act which comprises of the following:
- Modifying or abolishing the present constitution
- Termination of the company
- Prospective conduct of the company will be variable
- Warning the person from getting involved in such type of conduct and behaviour, and entailing them to behave in a certain way
- Hiring new and fresh associates and in some cases, managers
- Buying of one shareholder’s share by another shareholder, willingly and lawfully
- Reducing the company’s share capital when buying the shares
- The company or the shareholder will set up and defend legal proceedings by the company’s name
The directors should know their duties and should treat all the shareholders fairly. They should also analyse the consequences of their actions with regard to minority shareholders beforehand. This act facilitates the oppressed minority shareholders who have no say in the company’s affairs. Decisions should thus be made keeping the company’s interest as well as all the shareholders’ well-being in mind.