The Australian government, judiciary and executive authorities have contributed significantly to rectify the situation earlier prevailed, to ensure protection of the interests the minority shareholders over the period of time. The paper seeks to study the gaps at the legislation as well as implementation level in transforming these policy decisions to the fulfillment of the objectives desired or intended in line with the spirit behind the process, taking into consideration, the complications involved in social background and the interpretations.
The issues connected with the shareholders are multifarious and are interconnected or interrelated to various stakeholders’ interest in a business, and hence it becomes too difficult to enumerate the various situations which could be foreseen at the time of legislation or practicable to include in statutes, which warrants interpretations in the court of law for equitable justice to the parties concerned. Direct involvement of all the members of a company in a complicated business enterprise is not feasible in modern times. Therefore the directors of the corporations are expected to exercise their powers taking into account the interests of all the stakeholders and the other stakeholders.
In Sidebottom v Kershaw, Leese & Co., the majority shareholders who were also the directors, passed a special resolution to alter the articles by allowing the directors to require the transfer at full value of shares held by an shareholder who competed with the company’s business. Minority shareholders who ran a business that competed with the company sought a declaration that the amendment was invalid. The court held that the alteration satisfied the Allen’s test in that it was taken for the company’s legitimate business interests and not for the interests of specific members.1 However in various other decisions, the treatment has differed based on the circumstances obtained in the cases.
Foss v Harbottle rule is a famous