When company disputes become shareholder oppression

In 2025, the number of registered companies in Australia exceeds 3.4 million! Many of these companies have multiple shareholders.

A key problem I see that many companies face is that shareholder relationships deteriorate over time and disputes arise.

Often these disputes are entirely uninsured!

Shareholder oppression is an area of law designed to protect minority shareholders from being unfairly treated.

BUT BEWARE - not every dispute within a company will constitute oppressive conduct.

Part 2F.1 of the Corporations Act 2001 (Cth) (“the Act”) includes oppressive conduct regime and section 232 of the Act grants broad powers to the court to make orders for relief for shareholders who have been oppressed.

Oppressive conduct occurs when the conduct of a company’s affairs is either contrary to the interests of the members as a whole or oppressive to, unfairly prejudicial to, or unfairly discriminatory against a member or members.

What do I mean? Things like:

• Exclusion from management
• Improper diversion of business to another
• Excessive remuneration or other misuse of company funds
• Improper issuing of shares
• Exclusion from accessing the company’s books and records

Oppressive conduct can occur for many reasons, a classic example is when a business becomes successful and company members are no longer on the same page.

A major shareholder may opt to exclude a minority shareholder from management of the business - to avoid a dispute - and which by its very nature, is oppressive conduct.

In BBHF Pty Ltd v Sleeping Duck Pty Ltd & Ors [2024] VSC 320, the Court found that a mere dispute amongst company members is not oppression.

In John J Starr Real Estate Pty Ltd v Robert R Andrew A’asia Pty Ltd (1991), the Court highlighted that mere subordination is not oppression.

While the Act defines oppressive conduct broadly, there is significant case law in this area to help us pinpoint where the conduct of a company is oppressive and when it is not.

If you have genuine concerns that the conduct of majority shareholders is oppressive

• don’t sit on your hands - YOU need to act fast.

There are significant laws that aim to protect minority shareholders from being unfairly treated and grant a Court wide powers to have:

• The company be wound up
• The company’s constitution be repealed or modified
• The purchase of shares
• Regulates the conduct of the company’s affairs in future

If you are a shareholder and you have concerns about those with a controlling stake misusing their powers DON’T DELAY.

This is one area of law where there is an efficient process of bringing a proceeding before the Supreme Court of Victoria and where orders for books and records and mediation are often ordered shortly after filing proceedings.

This article is a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

Tagged as:

• corporate law
• litigation