BUSINESS AND COMPANY LAW ASSIGNMENT

"Within a company there are many areas of potential disagreement among members. As the range of potential disagreement is very broad, so also is the scope for exploitation and abuse of minority shareholders within the company. However, it is in the small private company that the plight of minority shareholders is most severe. Minority shareholders in private companies do not have a market exit option.

Minority shareholders are also susceptible to exploitation through a number of techniques directed towards diminishing the value of their investment or procuring its disposal at undervalue. These techniques include the withholding of dividends with profits effectively distributed amongst the majority in the form of salaries, bonuses and other emoluments. They may involve exclusion from management participation, diversion of corporate assets to interests associated with the majority, disproportionate share allocations, withholding information concerning the company affairs or the making of fundamental corporate changes affecting the value of minority interests."

Paul Redmond, Companies and Securities Law 5th Edition at p 502.

Analyse and discuss this statement in light the various statutory remedies that are available to minority shareholders to deal with situations where the majority shareholders misuse of power or breach their duties. Your answer should refer to the relevant statute and case law.

Required readings

Fitzpatrick J, Symes C, Veljanovski A, Parker D. (2013) Business and Corporations Law, 2nd Ed., Lexis Nexis Butterworths. Chapter 9 at P 488