Topic 9 - Member's Remedies Flashcards
(15 cards)
What is the purpose of Member’s Remedies?
- Protect Shareholders from oppression, unfair treatment
What is s232?
Oppression Remedy = allows member to apply for relief if company affairs are OPPRESSIVE, prejudicial, discriminatory or contrary to interests of members as a whole
What is Derivative Action?
- Allows members/officers to bring proceedings on behalf of company if company fails to do so (where the Agency problem occurs)
What are Winding Up Orders?
- Allows courts to wind up a company
How are injunctions used against Directors?
- Prevent directors from breaching Corps Act
What TEST is used for Oppression?
‘Would a reasonable director have acted this way?’ (Morgan v 45 Flers Avenue)
What is a QUASI-PARTNERSHIP
A 50/50 partnership whereby one relies on the other
What if there is a refusal to pay dividends?
—>
If company has ability to pay
If company deliberately not share profits to shareholders
THEN this is ‘oppressive’
What is there is an Exclusion for Management?
- Typcically in Quasi-Partnerships, each member should have a form of power/management
What if there is a failure to act in best interests of company?
–> Derivative Action, whereby members can bring proceedings on behalf of company
What are the ramifications of diluting a member’s shareholding and transferring control of a company?
Oppressive and may justify relief under s232
When will winding up be refused?
- If another remedy is appropriate
- Application is unreasonable
If there is a Breakdown of Mutual Trust, will Winding-Up be viable?
YES –> Typically, with mutual expectation of shared management, a breakdown of this trust can constitute Winding Up
What is Substratum?
Company NOT completing its objects
If there is a failure of Substratum, can company be winded-up?
YES
