This is what was asked of the QLD Court of Appeal (“QCA”), with judgement delivered on Friday.
It was not in dispute that the majority and minority shareholders were in a ‘quasi-partnership’ and that the relationship had “irretrievably broken down” due to the majority’s conduct – ie oppression, unfair prejudice and discrimination against the minority.
Some harsh findings …
The Appeal was about the appropriate remedy for the minority:
(a) wind-up the company (ss 233 or 461); or
(b) force the majority to buy-out the minority (s233).
The QCA dealt with this by assessing the consequences of the events and circumstances of each option and determining reasonableness.
The QCA noted a wind-up is not a “last resort” order, rather if there is an alternative and adequate remedy, the Court would favour that remedy.
In the end, the QCA favoured the option of the wind-up over the buy-out because:
– the valuation of the minority would be expensive, extensive and time consuming
– the real uncertainty that the majority was willing and able to buy-out
– the majority were unlikely able to afford the buy-out without the backing of their holding company, for which there were no undertakings
Link to the case: http://www.austlii.edu.au/cgi-bin/viewdoc/au/cases/qld/QCA/2018/48.html