Articles and legal news from the Atkinson Vinden Team.

Shareholder Oppression


Whilst there are no defined limits on what constitutes shareholder oppression, it generally occurs where a minority shareholder is subjected to unfairness or prejudice by the abuse of majority power or control over the company.  In that respect, it is not uncommon in the operation of companies for majority shareholders to seek to use their influence over the conduct of company’s affairs for their own benefit (perhaps understandably).

The courts have wide-ranging powers to grant relief to a shareholder if the conduct of a company’s affairs (including any actual or proposed act, omission or company resolution) is either contrary to the interests of the shareholders as a whole or oppressive to, unfairly prejudicial to, or unfairly discriminatory against, a shareholder or shareholders. However, there must be an element of unfairness that goes beyond mere disadvantage; in that sense a business decision, which is judged to be objectively reasonable and untainted by improper motives, would be respected by the Court.

Examples of oppressive and unfair conduct are varied and include:

The diversion of a business to another entity and/or the misuse of company funds including the application of company funds to benefit the interests of some shareholders, but not others

  • Payment of excessive remuneration to a controller of the company (particularly when this is not done for a legitimate commercial purpose and no attempt has been made in good faith to estimate a proper remuneration) as well as the non-payment of dividends to some shareholders
  • Majority shareholders restricting dividends generally without good business reasons
  • Improper exclusion of a minority shareholder from participation in management
  • Denial of access to information
  • Oppressive conduct at company board meetings e.g. unfair board room tactics
  • Excluding minority shareholders from salaried positions within the company (in particular when this was not done in the bests interests of the company)

Minority oppression can also occur in unlisted private companies. This often occurs because there is often no market of buyers for a minority interest in a private company (except perhaps for the oppressing majority shareholder) and without resort to the Courts, the minority shareholder may receive no dividend, be unable to sell his or her shares and have his or her capital locked in to the company indefinitely while it is run for the benefit of others, with management continuing to be paid significant salaries or bonuses.

The legislation provides far-reaching remedies for oppressed minority shareholders including granting the court power to order:

  • that one or more of the majority shareholders purchase the minority shareholder’s shares at a price determined by the Court (this is known as a Court ordered “buy-out”)
  • that the company purchase the minority shareholder’s shares
  • that a receiver or receiver and manager be appointed
  • that an injunction be granted against the company or a director/ majority shareholder to restrain the oppressive conduct
  • requiring a person to do a specified act e.g. ordering that overpayments made for the benefit of majority shareholders be paid back to the company
  • That the company be wound up.

 In practice the most common form of remedy sought by minority shareholders in oppression cases is a buy-out.  However sometimes a buy-out is not viable because, for example, there has been no offers made to buy the shares of the minority at a fair price and a liquidator may be able to sell the assets on the open market and divide the proceeds, absent a sale of the company’s assets to one of the disputing parties; of course an order to wind up a solvent company may often be too extreme a step to take and may not be justified in the circumstances.

If you are minority shareholder and are concerned you are being unfairly oppressed by the actions of the majority, you should talk to our Disputes Team who will be able to look at the facts of your case, advise you of the applicable law, diligently negotiate a resolution of your behalf and, if necessary, commence oppression proceedings on your behalf in a timely fashion.


Protecting your reputation starts with simplifying the complex. This handy checklist should quickly point you in the right direction and help you understand whether you have a case, and where to start to secure the best possible outocme.