Reference no: EM13337297

Within a company there are many areas of potential disagreement among members. As the range of potential disagreement is very broad, so also is the scope for exploitation and abuse of minority shareholders within the company. However, it is in the small private company that the plight of minority shareholders is most severe. Minority shareholders in private companies do not have a market exit option.

Minority shareholders are also susceptible to exploitation through a number of techniques directed towards diminishing the value of their investment or procuring its disposal at undervalue. These techniques include the withholding of dividends with profits effectively distributed amongst the majority in the form of salaries, bonuses and other emoluments. They may involve exclusion from management participation, diversion of corporate assets to interests associated with the majority, disproportionate share allocations, withholding information concerning the company affairs or the making of fundamental corporate changes affecting the value of minority interests.”

Paul Redmond, Companies and Securities Law 5th Edition at p 502.

Analyse and discuss this statement in light the various statutory remedies that are available to minority shareholders to deal with situations where the majority shareholders misuse of their power or breach their duties. Your answer should refer to the relevant case law.

Footnotes or end-notes must be used to acknowledge the source or sources of information contained in the assignment.Footnotes are preferred, but either will be accepted.In regard to the acknowledgment of references and matters of style and presentation, students are referred to:

 

1. Australian Guide to Legal Citation – VU Library Homepage.For all referencing questions for your assignment or any legal writing See: Australian Guide to Legal Citation:The VU Library has a 4 page edited version under Information for researchers: Click on Information for researchers and then click on Referencing and then click on Style Manuals. A copy of the Australian Guide to Legal citation is also available on Webct.

Format

· Typed preferably and double-spaced

· Title page with student name and number, Subject code and name, topic

· A4 paper

· Sequential page numbering

· No folders

Assignments must be typed (word processor), using one side of the page only and leaving a wide margin.The word limit is 2,000 words.