Unfair Prejudice and Just and Equitable Winding Up Flashcards

1
Q

What is an action for unfair prejudice?

A

Action brought by shareholders on grounds that company is being run in such a way they have suffered unfair prejudice

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2
Q

What are examples of unfairly prejudicial conduct?

A
  • granting of excessive remuneration to directors
  • directors’ dealing with associated persons
  • non-payment of dividends
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3
Q

Does the shareholder bring a claim on behalf of themselves or the company?

A

Themselves

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4
Q

Is negligence or inept management of a company unfairly prejudicial conduct?

A

No

Unless conduct amounts to serious and/or repeated mismanagement which puts at risk the value of the minority shareholder’s interest

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5
Q

Are disagreements as to company policy unfairly prejudicial conduct?

A

No

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6
Q

Is bad faith unfairly prejudicial conduct?

A

No - no requirement to show bad faith or deliberate intent for conduct to be unfair

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7
Q

Is the claimant’s conduct relevant in bringing a claim for unfairly prejudicial conduct?

A

May be relevant but no requirement that they come with clean hands

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8
Q

Is excessive director renumeration unfairly prejudicial conduct?

A

Potentially - court take a wide view

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9
Q

Is failure to meet legitimate expectations of shareholders in regards to being involved in management unfairly prejudicial conduct?

A

Yes may amount to unfairly prejudicial conduct

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10
Q

What remedies are available for unfair prejudice?

A

Court can grant such order it sees fit.

Normally order petitioner’s shares to be purchased by wrongdoers

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11
Q

How are petitioner’s shares to be valued under order for them to be purchased?

A
  • court has wide discretion to set fair price
  • consider valuation method in articles (if any)
  • no discount applied
  • valuation at date of court order
  • behaviour of petitioner may be relevant
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12
Q

What is a petition for just and equitable winding up?

A

Shareholder asks court for company to be wound up on grounds that it is just and equitable to do so

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13
Q

When for court grant petitioner for just and equitable winding up?

A

Court has wide discretion here.

Unlikely they will opt for this if other options are available.

Very drastic solution to problems

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