The essay deals with the aspects of the turmoil of corporate law where it highlights the case of the five brothers who have inaugurated a cafe and are currently in some opposition based dispute. The essay highlights the case overview that basically deals with the basics of the case. The problem related to the case briefly elucidates the wish of the younger brother who wants to vacate his position from the business thus moving out with his share. In contrary, the elder brothers are unwilling to give TIM any share and thus bullying him so that TIM moves out without claiming any share. The thesis statement of the study is based on suggesting the Equitable and Statutory remedies that TIM can pursue so as to obtain all the dues and leave the cafe business in no time.
2. Case Overview
As per the case, it was found that the youngest brother TIM is being harassed by the other elder brothers so that they escape of paying the percentage of the shares. The prime cause for this is that Tim presently is reluctant to continue with the business and that wants his share. However, to dismay, it was found that the elder brothers are playing petty games with TIM so as to escape from paying off their younger brother. Thus, TIM needs proper suggestion so that he gets all the dues cleared and also lies in safe hands from being bullied by his elder brothers. The suggestions are based on the equitable remedy and statutory remedy that TIM can follow to fulfill his purpose.
3. The problem within the case
The case highlights the dispute between the five brothers who have opened a private company named "The Grumpy Grande Pty Ltd". The company had a constitution that stated:
The company specializes in catering to premium coffee that is brewed fresh to the social event, corporate or sporting from the rear of the minivan.
The shareholders and the directors are the five brothers who have opened the company.
The shares of the company can only be sold to the individual brothers and that it can be done so with the mutual permission of the other shareholders.
The decisions related to the business need to be made by the vote of the majority.
The four elder brothers perceived that the younger brother was trying to vacate his position, thus chalking out plans to defy TIM from the business shares. The brothers in order to defy TIM tried to harass in every way possible. They used the constitutional statement of a majority vote to suppress TIM from selling his respective shares. Thus, it is well defined that the terms and conditions of the company constitution made the other brothers take advantage of the scenario.
4. Equitable Remedy
The Equitable Remedy that can be suggested to TIM is the Equitable Limitation on the Majority Voting Power. This is also known as the “Equitable Limitation” or the “Fraud on the Minority”. The rule states that the “Equitable Limitation” is a purpose of action, obtainable to the Minority Shareholders, which restricts the Majority Shareholders from the passing of resolutions that mainly meant for an Improper Use (McInnes, 2018).
The rule is bifurcated into two namely the cases that do not involve the Constitution's amendment and the cases that involve the Constitution's amendment. It was found that the company was amended to the Constitution, thus, the case procedures will pursue the latter one. Moreover, it was found that the category that the case inclines to is the one dealing with amendments to permit the expropriation of valuable rights or shares. The category stays valid if the cause of the case is proper and that the minority shareholder is not harmed by the enforcement of this rule (lawreform.vic.gov.au, 2019).
The proper purpose of the company states of preventing significant harm/detriment being caused due to the majority of shareholders. According to this statement, the case stands valid and that the majority of shareholders are causing harm not only to the company but also harassing one of the stakeholders. It was also found that the company "The Grumpy Grande Pty Ltd" was going through repressions and that the majority of shareholders are trying their best to suppress the minor one. Thus, it not only brought harm to the company but also shattered the trust and bond between the shareholders rather the brothers into pieces (companydirectors.com.au 2019).
The amendments need to be fair and appropriate inclusive of both the types of fairness so as to refrain from being oppressive. The two types of fairness can be classified as Substantive and Procedural Fairness.
Procedural Fairness- This type of fairness requires the shareholders holding the majority positions to disclose completely all the relevant information in linkage to the amendment. This type of fairness suits the case as the majority shareholders of The Grumpy Grande Pty Ltd tried to suppress the minority shareholder by hiding the relevant documents pertaining to the amendment. The four directors tried to block the business ideas and thus the permission to sell the company assets of TIM the minority stakeholder. TIM can follow this fairness in order to get the permission of performing his activities that can help him to vacate his position by selling the shares (McInnes, 2018).
Substantive Fairness- This type of fairness deals with the meaning that the value for the share that is seized needs to be proved as appropriate including the company assets, and the value of the shares in the market. It also needs to be proved that includes the dividends and nature of the company and the future that the company is likely to behold. The case of “The Grumpy Grande Pty Ltd” can be inclined to the type of fairness as the values of the shares needs to be proved fair for TIM, the minority shareholder of the company. TIM requires the clearance of his dues that can be well attended through the persuasion of this type of fairness (Yarram, 2015).
TIM needs to prevent the harassment that he faces from the end of the other stakeholders due to the improvement of the majority vote. This causes hindrance in the path of TIM from getting out of the company with the dues getting cleared. The other four directors form the majority shareholders who are trying hard to escape from the fact of paying off the dues to the minority shareholder (Killen, et al. 2016). This, in turn, proves to be a bone in the throat of TIM who is trying to get away with the dues. TIM also needs to get a proper valuation of the shares thus; this type of fairness can prove to help him out. This is because of the types of fairness deal with the valuation of the assets with the present market values of such type of products. Thus this prevents the majority shareholders from bargaining with the prices if the shares are auctioned.
As per the dealings of the two types of fairness, it can be well affirmed that TIM can pursue this suggestion to vacate the company in no time by clearing all the dues without making any compromises.
5. Statutory Remedy
The Statutory Remedies that can be suggested to TIM are:
Some of the majority's actions may be vague if they are not consistent with respect to the Corporations Act 2001.
During this time, the oppressed member can appeal in front of the court on behalf of them to protest against the majority shareholders if their actions lie against the minority shareholders.
The Corporations Act also proves to provide powerful remedies to guard minority shareholders.
The remedies that are aforesaidprove to fit well with the case study as the case highlights over the harassment of a minority shareholder by the majority shareholders.
The oppression remedy falls under the statutory remedies that states of causing invalidity to the actions of the majority shareholders if it is found that the actions are making any member oppressed. Moreover, it also invalids the action if it is found that the actions of the majority of shareholders tend to unfairly prejudice or discriminate with the minority shareholders (iosco.org, 2019). Thus it can be said that this rule will help TIM to prevent himself from getting harassed or rather bullied by the other directors of "The Grumpy Grande Pty Ltd".
As per the Corporations Act, it can be stated that when the decision of the Majority stakeholders is found to be oppressive the court can make any one of the following order as stated:
Dissolve the organization
Regulating the affairs of the Company
Asking the company to repeal or modify the existing constitution
Enforce the company to procure the shares of the oppressed member
To appoint a receiver
The aforesaid orders that the court can enforce upon the majority shareholders prove to mitigate the oppression of the minority shareholders who were oppressed. The orders can be related well with the present case scenario and thus can be used in solving the oppression and humiliation that TIM is facing daily by the other directors of the company (Yarram, 2015). The orders especially the enforcement to the company in procuring the shares of the oppressed member prove to help TIM in collecting the dues that he will receive from his company shares (Kurti, 2016).
As per the partnership act, it deals with the valid agreement between the stakeholders to carry forward the business jointly. Moreover, it also deals with the mutuality of agency, interests, rights, and obligations and also helps in drawing profits to the company. But to dismay, it was found that The Grumpy Grande Pty Ltd was going through turmoil that led to the failure in partnership's true cause (Erdiaw-Kwasie and Alam, 2016).
The oppression rule is only applicable if it passes the test conducted by the Court. The Court queries whether the majority of shareholders had any oppressive effect or not. In respect to the query, TIM could easily justify the oppression that he is facing and that the wishes that make so that he can receive the basic possessions.
From the above report, it can be concluded that the minority shareholders can also prevent themselves from getting bullied by the majority shareholders, thus proving the thesis statement. The report portrays a case that deals with the harassments that a minority shareholder faces by the majority shareholders. The report also highlights the methods and remedies that can help the minority shareholders to prevent them from being bullied. The report also suggests TIM of the Equitable and Statutory or Oppressive remedy that he can follow to get rid of the harassments. The methods that will help him to obtain the dues by selling the shares are also attended well in the report. Thus, the report proves to help him in fulfilling his purpose of vacating the position in the company while taking away the dues and also helps him to get rid of the bullies by the majority stakeholders.
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