The High Court and Minority Shareholders

Abstract

extract] The judgments have largely reinstated the views underlying the three traditional British cases in this area, namely, Brown v British Abrasive Wheel Co, Dafen Tinplate Co v Llanelly Steel Co and Sidebottom v Kershaw, Leese & Co. These cases stand for the principle that it is not permissible, in the absence of a specific statutory power, for the majority to alter the articles so that it can, simply for its own benefit, eliminate the minority. This short article examines the legal and intellectual bases for the judgments and concludes there is both a proper purpose test and a concept of fairness which are being appealed to by the High Court. A number of issues are referred to briefly, including the High Court's treatment of views on shares as an item of property, their view on section 180(3) of the Corporations Law and some possible implications for the future.