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Wednesday, 13 May 1981
Page: 2341

Mr JOHN BROWN(8.58) — We are now discussing Part IX of the Bill which deals with the conduct of affairs of a company in an oppressive or unjust manner. In the best of all worlds, I guest that that type of behaviour might not happen, but humans being humans and companies being companies, it does happen; so this is a very important Part. In our amendment we ask:

(b) adequate remedies for oppressive conduct, including extension of the concept of oppression to single and anticipated acts unfairly prejudicial to a shareholder; and provision of further means such as a 'shareholders' Tribunal' to protect the interests of minority shareholders,

Clause 320 constitutes a limited advance on the present section 186 relating to the oppression of shareholders. Clause 320 (1) (a) and clause 320 (2) are new clauses entitling a member of a company to apply for the winding up of the company if he believes:

that directors have acted in their own interests and not in the interests of the members as a whole or in any other manner whatsoever that is unfair or unjust to one or more of the members

We cannot altogether disagree with that. This innovation, however, merely restates in a different part of the Bill the right of a member which is already contained in clause 364 (1) (f).

The remedy of oppression has been seriously restricted in its application by the courts. The Opposition believes that the concept of oppression should be replaced by the concept of unfair prejudice which is referred to in the section of the English Bill to which the honourable member for Hawker (Mr Jacobi) referred. That section was recommended by the Jenkins Committee in the United Kingdom in 1962. Only by lowering the threshold will this become a meaningful remedy for oppressed minorities. In addition the tendency of the courts to require a course of conduct before finding oppression should be replaced by a provision that single acts of prejudice are sufficient to attract the remedy. The Opposition believes further that the concept of a shareholders' tribunal warrants closer scrutiny as a further means to shareholder protection. It is to be lamented that, when so much attention in the Companies (Acquisition of Shares) Bill has been devoted to the protection of shareholders, this urgent reform has been overlooked in the Companies Bill. I recommend that the Minister for Business and Consumer Affairs (Mr Moore) have a look at that section which the honourable member for Hawker has incorporated in Hansard. I think it is a much more advanced concept with regard to oppression of shareholders than is contained within this Bill. I hope that that would be one other area to which some urgent reform could be made. Perhaps the Minister could start the ball rolling in that area on the Ministerial Council.

Clause agreed to.

Clauses 321 to 323-by leave-taken together, and agreed to.

Clause 324 (Liability of receiver).