Oppression Proceedings: A Practical Guide for Minority Shareholders

Shareholder oppression is one of the most powerful tools available to minority shareholders facing unfair,
prejudicial or discriminatory conduct by directors or majority owners. In recent years, we have seen a rise in
cases involving dilution schemes, related-party transactions, asset shielding and exclusion from management –
particularly in private companies and high-growth SMEs.

This article is a practical guide to oppression proceedings under
section 232 of the Corporations Act 2001 (Cth), written for business owners, investors and
advisers who need a realistic view of what the Court will (and won’t) do.

What Is Oppressive Conduct?

Oppression is a broad concept. The Court looks at commercial unfairness, not just strict legal
rights. In simple terms, the question is whether the conduct is unfair, prejudicial or discriminatory to one or
more shareholders, or contrary to the proper administration of the company.

Examples of potentially oppressive conduct include:

• Diverting company funds or opportunities to a related entity controlled by the majority;
• Shutting minority shareholders out of management or board-level decisions;
• Issuing new shares to dilute a minority’s interest without a proper commercial basis;
• Refusing to provide financial documents, MYOB/Xero access or key company records;
• Excluding particular shareholders from dividends or other distributions; and
• Using company assets for personal benefit without proper approval or accounting.

The Court will consider the overall pattern of conduct, the parties’ legitimate expectations and the way the
company has actually been run in practice.

Common Real-World Scenarios

In our practice, oppression claims often arise in the following situations:

• Valuation manipulation – majority shareholders engineering a transaction to buy out
  the minority at an artificially low value;
• False or misleading investment representations – where the minority was induced to invest
  on a particular understanding that is later ignored;
• Director self-dealing and asset transfers – moving assets or contracts to a new entity,
  often owned by the same controllers;
• “Phoenix-style” restructures – stripping out the business and leaving liabilities behind;
• Refusal to provide financial visibility – locking minority shareholders out of MYOB/Xero
  or banking records; and
• Exclusion from management – removing a shareholder-director from decision-making,
  communication channels or board meetings.

If you recognise some of these themes in your own company, an oppression remedy may be available.

What Orders Can the Court Make?

The Court has extremely wide powers under section 233 of the Corporations Act. The aim is to
fashion a remedy that is fair in the circumstances, not simply to punish one side.

Common orders include:

1. Buy-Out Orders at Fair Value

The most common outcome is an order that one side purchase the other’s shares at a price determined by an
independent valuer. Where there has been serious misconduct, the Court can adjust the valuation to reflect:

• misuse or dissipation of company assets;
• uncommercial related-party transactions; and
• improper dilution of the minority’s interest.

2. Setting Aside Improper Transactions

The Court can unwind transactions that were designed to strip value or prejudice particular shareholders, including
transfers of assets, licences or business opportunities to related entities.

3. Regulating the Company’s Future Conduct

In some cases the company can be salvaged. The Court may impose:

• governance and reporting requirements;
• restrictions on related-party dealings; and
• controls on how key decisions are made.

4. Appointment of a Receiver or Other External Controller

Where relationships have broken down completely, the Court can appoint an independent person to manage the
company’s affairs, collect assets and protect value while the dispute is resolved.

5. Winding Up on “Just and Equitable” Grounds

Winding up is usually a last resort, but it is available where mutual trust and confidence has irretrievably
broken down and there is no workable way for the company to continue.

Key Evidence You Will Need

Oppression proceedings are evidence-heavy. Strong documents create leverage at mediation and in Court. We typically
ask clients to provide:

• The company constitution and any shareholders’ agreement;
• Historic and current cap tables, share registers and option documentation;
• Financial statements, management accounts and bank statements;
• MYOB/Xero access or exports;
• Invoices and contracts showing related-party transactions;
• Emails, text messages and board minutes evidencing exclusion or misconduct; and
• Any valuations or term sheets used in prior capital raisings.

The sooner this material is collected and analysed, the stronger your position is when negotiations begin.

How Long Do Oppression Proceedings Take?

Timeframes vary depending on the complexity and the attitude of the other side, but as a rough guide:

• Urgent relief (injunctions, access orders): often within 24–72 hours;
• Interlocutory steps (pleadings, disclosure, valuations): several months; and
• Final hearing: typically within 6–12 months in more complex matters.

Most cases do not run to judgment. Once the company’s value and the strength of the evidence are clear,
many disputes resolve at or shortly after mediation.

Why Early Legal Advice Matters

Oppression cases turn on narrative, credibility, valuation and timing. Early intervention allows
you to:

• preserve and secure critical documents and financial records;
• shape the factual narrative before it is rewritten by others;
• identify urgent relief (for example, to stop asset transfers); and
• design a strategy that balances legal outcomes with commercial reality.

Waiting to “see what happens” usually benefits the party in control of the records, the bank accounts and the
narrative.

Conclusion

Minority shareholders are not powerless. The oppression remedy is a flexible and powerful tool to challenge unfair
conduct, restore proper governance and achieve a commercial exit on fair terms.

If you suspect that directors or majority shareholders are acting unfairly, excluding you from information or
stripping value from the company, it is important to obtain timely, specialist advice.

Need Help With a Shareholder or Oppression Dispute?

Boss Lawyers regularly acts for minority and majority shareholders, directors and companies in complex corporate
disputes across Australia, including oppression proceedings, director misconduct claims and governance disputes.

For a confidential discussion about your position, contact us on
(07) 3188 0200 or visit our
contact page.