Majority shareholders

v
minority shareholders
• 1. Who has the control over the company?
• Majority shareholders
• 2. Who is the minority?
• Who held less than the majority voting shares.
• 3. Who can take legal action if a company suffers a
wrong?
• Company itself –separate legal entity
• Director/shareholder cannot take legal action
* This is the general rule
• 4. What happen if the members’ personal rights are
infringed?
• The individual member can bring legal action to remedy
the infringement.
• What is the members’ personal right?
• R ights which are provided by the CA 2016 such as right on
member to attend and vote at a general meeting.
• 5. What happened if majority perpetrate fraud on
minority?
• A shareholder also can sue if the action of majority
constitutes fraud on the minority.
• Shareholder become plaintiff.
• Plaintiff needs to establish/prove:
• 1. fraud
• 2. the wrongdoer (majority) are in control of the company who
prevent the company itself from bringing legal action in its own
name
 6. How to protect the minority
shareholders?
• If the members’ personal rights are infringed and majority
perpetrate fraud on minority, we can say that the minority
is OPPRESSED
• Section346(1) has given power to the court to remedy
conduct which involves:
• Oppression
• Disregard the interest
• Unfair discrimination or Unfairly prejudice
* If any one of the above happened, minority shareholder can
take legal action against the minority
 7. What is oppression?
• Oppression includes behaviour which is burdensome, harsh and
wrongful.
• The oppressed must be forced to submit to some
overbearing act or attitude which is unfair to them: Re Jermyn
Turkish Baths.
• Not paying dividends as high as they could be is not oppressive:
Re G Jeffrey (Men’s Store)
• Examples of oppressive conduct;
• Payment of excessive remuneration: Sanford v Sanford
• Making a share issue with the dominant purpose of reducing a
shareholder’s proportional stake in the company: Netbush Pty Ltd
v Fascine Developments
• Exclusion of a member from management which this is
contrary to the constitution: Hogg v Dymock
 8. What is disregard of members’
interest?
• It involves something more than a failure to take into
account of the minority’s interest, there must be
awareness of that interest and there is an evident
decision to override it or brush it aside.
 9.What is Unfair discrimination or
Unfairly prejudice?

• Discrimination means one group of members is given a

benefit which other members do not have.
• Prejudice means causing prejudice, detrimental to right or
interest.
• Eric Lau Man Hing v Erama Jaya Sdn Bhd & Ors
• It was held that there was no doubt that the minority
shareholders were excluded from day to day administration of
the company. In this respect, oppression would be found
where a shareholder who was entitled to manage the company
was excluded from the scope of management
10. What are the other examples of possible oppressive,
disregard of members’ interest and unfairly prejudicial
or unfairly discriminatory conduct?
• Share issued for improper purpose.
• No dividend or inadequate dividend is given.
• Eric Lau Man Hing v Erama Jaya Sdn Bhd & Ors
• Held: The non payment of dividend together with the failure
to keep proper records amounted to oppressive conduct in
disregard of the interests of the minority shareholders by the
majority.