• Commercial Law

    Commercial Law

    We are business people as much as we are lawyers. We will take care of the legal documents so you can confidently run your business.
    As your business grows, its risk profile and governance challenges will change. We partner with our clients over the long term to ensure they are in the driver’s seat for success.

  • Dispute Resolution

    Dispute Resolution

    We are in your corner when the going gets tough. Having resolved over 6,500 disputes for business owners have seen it all before.

    Whether you need a skilled negotiator or a fearless litigator, we specialise in delivering commercial results when:

    Customers refuse to pay;
    Suppliers let you down; and
    Business Partners do the wrong thing.

  • Employment & Safety

    Employment & Safety

    The biggest challenge for any business owner, is managing their employees.

    A difficult employee can make you question why you got into business in the first place and be toxic to your team morale.

    We deliver proactive solutions to manage your team via employment contracts, policies and procedures as well as handling employment disputes when they arise.

  • Property & Construction

    Property & Construction

    Property is the key most wealth in Australia.  Whether you are buying, selling, leasing or developing property, you need a lawyer you can count on.

    We can advise on the whole property development process from obtaining finance to development approvals, construction and sale or leasing.

    We also act for the Master Builders Victoria and have extensive expertise in construction contracts and disputes.

  • Family Law

    Family Law

    At Taurus Legal Management we understand the unique challenges clients encounter during family disputes, especially when children are involved. Our family lawyers specialise in handling high-asset cases with a focus on protecting clients wealth, securing their family’s future, and safeguarding the best interests of their children.


Taking Advantage Of Minority Shareholders Can Land You In Hot Water

We recently secured a $1.5 million dollar compensation payout for a minority shareholder who was denied dividends.

Minority shareholder rights in Australia should not be ignored.  While majority shareholders can effectively control a company, they are required to consider the interests of all minority shareholders.  It is illegal for majority shareholders to discriminate against or oppress minority shareholders.

Management of a Company

The Board of Directors is responsible for managing a company.  However, if one or more shareholders own over 50% of the shares, they can usually remove the Board and effectively control the company.

If a shareholder has less than 50% of the shares in a company, they have more limited rights and are considered a “minority shareholder”.

Minority Shareholders

Minority shareholders are often overlooked or even exploited by majority shareholders.  This can be the case even where each shareholder has an equal number of shares but 2 or more shareholders vote as a “block’.  For example, where there are 5 equal shareholders but 3 of those shareholders vote together.

You should check the company constitution and any shareholder agreement to know exactly what rights minority shareholders have.  In some cases, a shareholder agreement will give minority shareholders veto powers over key decisions.

However, even in the absence of powers in the shareholder agreement, a minority shareholder has some basic shareholder rights protected by the Corporations Act.  Those rights include:

  1. To attend, speak and vote at shareholder meetings;
  2. shareholder access to company records (provided they are genuinely required); and
  3. The right not to be taken advantage of, or ”oppressed”, by the majority shareholders

What is Oppression of Minority Shareholders?

The definition of “minority shareholder oppression” is inherently vague.  The legislation says that it is illegal for majority shareholders to act in a way which is:

  • Contrary to the interests of the shareholders as a whole;
  • Unfairly prejudicial to a shareholder; or
  • Discriminates against a shareholder.

Where a minority shareholder takes legal action, the Court will look at the conduct of the majority, how it impacts the minority, any other relevant factors and make a decision.

Some common examples of shareholder oppression include:

  1. Payment of excessive remuneration or bonuses;
  2. Restriction of participation in meetings or management;
  3. Denial of access to information;
  4. Denial of dividends without good reason;
  5. Use of company funds for personal purposes; and
  6. Uncommercial transactions for the benefit of the majority shareholder.

If the Court is satisfied the majority shareholder has acted improperly it has wide powers to order the majority shareholder rectify the conduct, payment of damages, or the winding up of the company.

So, while majority shareholders have significant power, that power must be exercised in a way that is not unfair to minority shareholders.   Getting the balance wrong can quickly destroy the value in the company and be costly to all those involved.

It is always helpful to get early legal advice if you are in any doubt about potentially oppressive behaviour.

Leading law firms committed to helping clients cost-effectively will have a range of fixed-price Initial Consultations to suit most people’s needs in quickly learning what their options are.

At Taurus Legal Management we have an experienced team who can answer your questions and put you on the right track, enabling you to focus on the business and to sleep easy.  Contact us on (03) 9481 2000 or at info@tauruslawyers.com.au.

Posted by Taurus Legal Management