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Company Law - Essay Example

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Company Law

The most appropriate remedy that Quincy should avail is the second remedy of applying for an order from the court on the ground that the company's affairs are being conducted in a manner which is 'unfairly prejudicial' under Part 30 CA 206, ss 994-998 because this remedy allows Roar to continue its business.
CA 2006 (s 994) gives Quincy very flexible solutions to disagreements within Roar without having to necessarily wind up the company under the first remedy. Specifically, s 994(1) CA 2006 provides as follows: "A member of a company may apply to the court by petition for an order under this Part on the ground - (a) that the company's affairs are being or have been conducted in a manner that is unfairly prejudicial to the interests of members generally or of some part of its members (including at least himself), or (b) that an actual or proposed act or omission of the company (including an act or omission on its behalf) is or would be so prejudicial. The 'Act or omission' under this Section can include either an isolated act or omission or a continuing situation, depending on the circumstances. In fact, in Re Norvabron Pty Ltd (No 2) (1986) 11 ACLR 33, this can even include an act which took place before the petitioner became a shareholder. Furthermore, the legal import of the term 'Conduct of the company's affairs' has been considered in Re Legal Costs Negotiators Ltd (1999) 2 BCLC 171 CA wherein there were originally four individuals who set up a company, each was a director and employee and each had an equal amount of shares. When the relationship with one person broke down, he was dismissed subsequently as an employee although he resigned as a director just before he was removed. Nonetheless, he remained a shareholder although he refused to sell his shares to the other three. When the majority petitioned under s 459 CA 2006 for an order that he should transfer his shares to them, the petition was rejected because of the distinction between this remedy and personal actions, i.e. in this statutory remedy, what is relevant to consider is the 'company's affairs'.
In the given situation, the following facts clearly indicate that the company's affairs are being or have been conducted by Patrick and Sally in a manner that is unfairly prejudicial to the interests of Quincy, a minority; and an actual act of the company (including an act or omission on its behalf) is so prejudicial to Quincy: Patrick and Sally have remove Quincy as a director; Patrick and Sally take out any profit from the business as director's salaries; and they also decide to change the nature of the business which by the Articles of Association requires a 75% majority. In fact, the 75% requirement in amending the Articles of Incorporation was not met because Patrick and Sally only owned at least 70% of the shares. Moreover, Patrick and Sally appropriated several valuable contracts to Sally's company, Tiddles Limited (Tiddles) which would normally have gone to Roar in order to make sure that no benefit will come to Quincy from these contracts. Clearly, these events and the facts taken together not only constitute a basis to grant an application for an order based on the ground that the company' ...Show more


Generally, a minority shareholder has at least two statutory remedies under the Corporation Act 2006 or CA 2006. These remedies are: (1) an application to have the company wound up on the 'just and equitable' ground (s 122(1)(g) IA 1986); and (2) an application for an order from the court on the ground that the company's affairs are being conducted in a manner which is 'unfairly prejudicial' (Part 30 CA 206, ss 994-998)…
Author : hansengrace
Company Law essay example
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