Todorova, Elizabeta Strumenikova (2025) Minority shareholders: do the oppressive conduct Provisions of the corporations act 2001 (cth) provide Adequate protection? PhD thesis, Victoria University.

Abstract

The relationship between majority and minority shareholders has emerged as a critical aspect of corporate law and governance. The increasing focus on this relationship began in the mid to late 1970s, when rising corporate activity, such as mergers, acquisitions, and hostile takeovers, served as a catalyst for bringing shareholders’ rights into sharper focus. Although minority shareholder rights, including access to records, participation in annual meetings, voting, and dividends, gained greater attention, varying across jurisdictions, their enforcement largely depended on court decision, where minorities faced significant challenges. More importantly, for a long time, corporations have allocated shares to shareholders as either majority or minority holdings. Notably, majority shareholders, with a larger shareholding, are afforded extensive control in a company, whereas minority shareholders, with little influence in decision making, remain vulnerable and frequently encounter restrictions in exercising their rights. A key concern is that this imbalance can diminish the value of shareholding and harm not only minority shareholders and the company itself, but also investor confidence and national overall corporate governance. Accordingly, oppressive conduct in companies occurs when the actions of a company’s controllers harm the interests of one or more shareholders or the company itself. In response, minority shareholders may initiate an oppression claim. Although this provides a legal avenue for seeking relief under statutory provisions, minority shareholders still face considerable difficulties when pursuing such claims. Various jurisdictions, however, have distinct laws for addressing minority oppression, each reflecting its unique approach to shareholder protection. This thesis examines the question of whether the oppression remedies under ss 232-235 of Part 2F.1 of the Australian Corporations Act 2001 (Cth) offer adequate protection to oppressed minority shareholders in Australian companies. The thesis argues that, currently, Australian laws fall short of meeting this purpose, as they fail to comprehensively address the challenges faced by oppressed minority shareholders. Therefore, in order to protect minority shareholders from oppressive conduct in companies, it is essential to identify and highlight the shortcomings of the relevant existing oppression laws and to offer recommendations for legislative reforms that would best protect minority shareholders in Australian companies. This thesis examines the positions taken by the United Kingdom, United States (specifically Delaware), Australia, Canada, Germany, Singapore and India, regarding oppression remedies available to minority shareholders facing oppressive conduct within companies. Through comparative legal research, the thesis identifies key similarities and differences in the laws on oppression in those countries, aimed to address the common issues and find relevant solutions for overcoming those issues in Australia. This thesis contributes to the evolving body of knowledge, as no prior research has examined the issue on the basis proposed. The thesis confirms that, while the scope of oppression remedies in Australia has broadened over time, they still do not adequately protect minority shareholders from the abuse of power by controlling shareholders. Based on the comparative analysis of Australian oppression remedies and those in the selected jurisdictions, this thesis concludes with a number of recommendations to best protect minority shareholders and promote a more effective regulatory regime.

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