Are you a minority shareholder? Are you being oppressed by another shareholder or shareholders with a greater holding than you? Don’t sweat it – sections 232 and 233 of the Corporations Act 2001 (Cth) (Act) are there to help.

But what if you’re a 50% shareholder, being oppressed by one or more people holding the total remainder of shares? Or, perhaps an equal partner in an incorporated partnership? Is that still oppression?

In short, yes. It’s less common, but sections 232 and 233 of the Act can still provide you with grounds for relief. Whilst those provisions (and their predecessors) have traditionally provided a remedy to oppressed minority shareholders, they do not actually require that the oppressing individual holds a greater stake than the purportedly oppressed individual – only that oppression, prejudice or discrimination has been inflicted.

A recent spate of Australian cases has confirmed this, with the most recent relevant decision being Patterson v Humfrey [2014] WASC 446. In that case, Le Miere J of the Supreme Court of Western Australia set out a useful summary of relevant authorities. I will not endeavour to reproduce that summary here. However, some observations about this variety of shareholder oppression include:

  • The Court’s general approach in such cases is to focus more on what the oppressed individual cannot do, as opposed to what the oppressing party can do;
  • This means that the purposeful triggering of voting deadlocks could, conceivably, constitute oppression for the purposes of section 232 and 233 where they prevent one party from taking position action that would otherwise exercise or protect their lawful rights or interests; and
  • There are also, conceivably, circumstances in which a “50/50” control situation leaves one party with effective control of a company where that party otherwise occupies a management or executive position, and the purportedly oppressed party does not.

At its core, oppression is the exercise of one’s rights to unfairly quash or suspend those of another. To prevent this, the Courts will, in my view, be willing to look beyond shareholder percentages when considering whether or not they will make an order under sections 232 and 233 of the Act. They will instead search for the true symptoms of oppression: prejudice and discrimination.