Examples of opressive conduct PDF

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SOME EXAMPLES OF OPPRESSIVE CONDUCT: Diversion of business opportunities: Where a director of a company or the majority members of a company divert business opportunities to themselves or to other companies which they control (but in which the minority member bringing the oppression action has no interest), this will constitute oppression. (Scottish Co-operative Wholesale Society Ltd. V Meyer) Improper exclusion from management: A common allegation in oppression cases is that the minority member has been excluded from participating in the management of the company. If the minority member has a reasonable expectation of continued participation in management, then removal of the minority member will be oppressive. (Hogg v Dymock) Oppressive conduct of board meetings: Where board meetings of a company are conducted in an unfair manner, this can constitute oppression. (John J Starr (Real Estate) Pty Ltd v Robert R Andrew (A’Asia) Pty Ltd) Unfairly restricting dividends: The members of a company may have a disagreement about the amount of dividends the company should pay to its members. Just because a minority member wants higher dividends, the decision of the directors of the company to adopt a conservative financial policy and not pay high dividends is not oppressive where this policy is agreed to by the other members: see Thomas v HW Thomas Ltd. However, if the majority members or directors deliberately pay low dividends or no dividends and this is part of a plan to prefer their own interests (for example, by paying themselves excessive remuneration out of the profits that could otherwise be paid as dividends), then this can constitute oppression. (Thomas v HW Thomas Ltd. ) Issuing shares in circumstances where the main purpose is to reduce a member’s ownership interest in the company: Where the majority members or the directors issue more shares in the company and the main purpose is to reduce the proportionate holding of a particular member of the company, this can constitute oppression. (Kokotovitch Constructions Pty Ltd v Wallington) Failure of directors to act in the interests of the company: Failure of directors to act in the best interest of the company can constitute oppression. (Re Spargos Mining NL and Jenkins v Enterprise Gold Mines NL.) Sale of company assets as an undervalue: Two directors of a company had acted oppressively when they arranged for the company to sell the shares that it held in two other companies to a person who was both the wife of one of the directors and also the daughter of the second director, in circumstances where the shares were sold at a significant undervalue, there was no independent valuation of the shares before they were sold, and the consent of the minority shareholders to the sale of the shares was not obtained. (Cassegrain v Gerard Cassegrain & Co Pty Ltd)...