The primary object of this thesis is to critically examine the extent of the existing protection afforded to minority shareholders in England and Australia, and also to make a comparison in some situations with the relevant law in the United States of America and certain other parts of the world.
It is not intended to examine every area of company law in which the rights of minority shareholders and investors can be affected, as this would require a detailed examination of many sections of the Australian Uniform Companies Acts and the general law. For example section 65 of the Australian Companies Acts confers a degree of protection on the holders of shares of a certain class in the event of their rights being varied or abrogated contrary to their wishes, by an alteration of the company's memorandum or articles. This section will not be examined in detail as the protection only relates to certain limited situations as stipulated in the section.
This thesis is concerned with the more general remedies available to shareholders which usually find their source in equitable doctrines such as the fraud on the minority concept, or the power of the courts to dissolve partnerships on the just and equitable ground.
There are three main subdivisions in this thesis:
1, Fraud on the Minority. This equitable doctrine and the circumstances in which it has been applied will be outlined. In many instances the cases concerning this doctrine have involved a breach of the directors' duties, and an illegal appropriation of the company's, or other member's property, or rights. The instances when shareholders can ratify the improper acts of directors will be examined. In this general category of breach of directors' duties an investigation will be made of the legal provisions dealing with share dealings by a company's officers, and the duties owed to the company itself and to individual shareholders in these circumstances. Since most breaches of duty by directors are probably due to negligence rather than to active dishonesty, an examination will be made of the Anglo- American standards relating to directors' negligence.
2. The Statutory Protection of Minority Shareholders
Here the remedies provided for winding up companies on the just and equitable ground, and the related and more recent provision dealing with oppression of shareholders will be considered and some comparisons made with the law of the United States.
3. Derivative Suits in England and the United States of America
Attention will be directed to the history and development of derivative suits in England, and more importantly in the United States of America, where the rules relating to these types of proceedings have been far more extensively developed and formulated.
Australia has tended to follow England in its reforms of company law, but England itself is probably now behind both the United States and the Western European countries in most areas of shareholder protection. As British company law is certain to be materially affected by European Common Market developments, this should itself act as a spur to Australian company law reform and to an independence of development.
In those areas of company law where judicial decisions are more important than legislation, the Canadian cases are often of greater interest to Australian lawyers than United States precedents. This is because the Canadian Courts, like our own, tend to mull over English decisions, while their United States counterparts frequently disregard all but the oldest of English cases.
However, even when new provisions are introduced to increase the extent of the protection of shareholders and investors, their effects are often mitigated by the traditional conservation of judges who tend to be guided by old established doctrines and precedents, and who are often reluctant to fully implement new remedies.
Because any wide ranging reforms of a statutory nature are frequently prone to be restrictively construed by judges trained in an English Common Law tradition, there is an argument for appointing younger and more widely trained lawyers to our superior courts.