Gambotto v WCP Ltd [1995] HCA 12

Gambotto v WCP Ltd [1995] HCA 12

An amendment to a company's articles of association authorizing the compulsory acquisition of minority shares is invalid unless it is both for a proper purpose – namely, to protect or promote the company's interests in an exceptional circumstance – and fair to the minority. Mere administrative or commercial advantage to the majority or company is not a sufficient justification, and full fairness and disclosure must be established by those supporting the expropriation. In the present case, as the amendment was only to secure tax and administrative benefits, it was not made for a proper purpose and was thus invalid.

Jurisdiction
Australia
Procedural Posture
Appeal / High Court Appeal From NSW Court of Appeal
Outcome
Appeal allowed
Legal Topics
['amendment of Articles of Association' 'compulsory Acquisition of Minority Shares' 'oppression of Minority Shareholders' 'validity of Shareholder Resolutions']
['corporations Law' 'equity'] ['amendment of Articles of Association' 'compulsory Acquisition of Minority Shares' 'oppression of Minority Shareholders' 'validity of Shareholder Resolutions']

Case Brief

Summary, issues, holding and outcome

More case intelligence is available

Unlock the full research layer for this judgment.

Full judgment text Downloadable case file Legal principles 1 Authorities cited 2 Party arguments 2 Amounts and remedies 1
Sign in to unlock

Procedural Posture

Appeal / High Court Appeal From NSW Court of Appeal

Legal Issues

  1. 1 ["Is an amendment to a company's articles of association that enables compulsory acquisition of minority shares by the majority shareholders valid under the Corporations Law?" 'Does such an amendment amount to oppression of minority shareholders?' 'Does such an amendment impermissibly restrict the right to transfer shares under s. 180(3) of the Corporations Law?']

Ratio Decidendi

An amendment to a company's articles of association authorizing the compulsory acquisition of minority shares is invalid unless it is both for a proper purpose – namely, to protect or promote the company's interests in an exceptional circumstance – and fair to the minority. Mere administrative or commercial advantage to the majority or company is not a sufficient justification, and full fairness and disclosure must be established by those supporting the expropriation. In the present case, as the amendment was only to secure tax and administrative benefits, it was not made for a proper purpose and was thus invalid.

Court Disposition

Appeal allowed

Orders

  • ['Set aside the orders made by the New South Wales Court of Appeal.' 'Order that the appeal to that Court be dismissed with costs.']