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The Supreme Court of Victoria recently released a new Practice Note for its Oppression Proceeding Program (OPP). This article explores some of the basics of oppressive conduct under the Corporations Act 2001 (Cth) (the Act) and touches on the subtle adjustments the Court is making to continue encouraging the just, timely, efficient resolution of such matters.
The Oppression Proceeding Program
The Program was introduced in 2014 in response to the increasing number of shareholder disputes and applications for relief under section 233 of the Act.
The Supreme Court’s approach stands as a great example of a process grounded in practical reality. It meets claimants where they are, rather than forcing them within artificial boundaries created by overly rigid procedures and forums. The Court has recognised that many of these disputes arise from small and often family-run businesses, where the value of the company is relatively modest, but the personal and commercial stakes are high. In that context, controlling costs is paramount, as is ensuring that matters are resolved justly and efficiently so all parties can move forward with minimal disruption.
This is an approach we strongly align with. Our focus is on guiding clients through these challenges with clarity and efficiency, helping them put difficult periods behind them and return their attention to what they do best.
Understanding Oppressive Conduct
The oppressive conduct regime provides a remedy for members, typically minority shareholders, where the company’s affairs, or an actual or proposed act, omission or resolution, are conducted in a way that is contrary to the interests of members as a whole or is oppressive, unfairly prejudicial or unfairly discriminatory to one or more members, as set out by section 232 of the Act.
Common examples of oppressive conduct include excluding a shareholder from management or decision‑making, unfair removal as a director or shareholder, and a lack of transparency or denial of access to information. Other examples may involve the failure to declare dividends, dilution of minority shareholdings, diversion of corporate opportunities, deadlock between equal shareholders that prevents the company from operating in the ordinary course of business, or preferential treatment of certain shareholders, often where related parties are involved.
Court Powers and Available Remedies
The Court has a wide discretion when it comes to orders it can make that it considers appropriate in each distinct situation. Section 233 of the Act sets out that the Court can make any order under the section it considers appropriate. Orders may be sought, for example, that there be a compulsory buy‑out of a member’s shares, often accompanied by ancillary orders for an independent valuation and inspection of the company’s books and records under section 247A of the Act.
The Court may also restrain proposed share or asset transfers or set aside share issues found to be oppressive. While winding up the company remains available, including on just and equitable grounds under section 461(1)(k) of the Act, it is generally regarded as a remedy of last resort.1
Procedural Changes Under the New Practice Note
The Practice Note maintains that applications under section 233 of the Act are to be made by originating process and supported by an affidavit (mercifully capped at three pages in length). The affidavit must:
- set out a clear and succinct summary of the facts alleged to constitute the oppressive conduct;
- identify the shares, business, assets, or other property that it is said should be the subject of valuation, and, where practicable, sets out a preliminary estimate of the value of the same;
- exhibit a current ASIC search of the company;
- exhibit a list on a single page that succinctly sets out each act or omission relied upon, and when each act or omission is said to have occurred; and
- have no other exhibits.
The key change in the current practice note is that you can now exhibit a single page of acts or omissions, instead of just an ASIC extract. This allows the affidavit to focus more on the dispute’s nature and the value a member may assign to their shareholding.
The broader procedural framework reinforces this streamlined approach, where the Corporations List Judge will review the proceeding and decide whether it is appropriate for the OPP and, if so, then it is referred to an initial conference before a Judicial Registrar.
The Practice Note also reflects a strong emphasis on narrowing the issues in dispute early. Defendants are expected to file responding affidavits shortly before the initial conference, the use of joint experts is strongly preferred, and competing expert reports are discouraged. The Practice Note has provided template orders, which consider early inspection of books and records under section 247A of the Act and an independent joint valuation. Collectively, these measures are designed to concentrate the parties’ attention on valuation and resolution at an early stage and avoid early skirmishes over less important matters (or matters that should not be in issue such as providing access to the financial records of the company).
Practical Realities of Oppression Proceedings
Although, as outlined above, the Supreme Court has streamlined the path to resolution, oppression proceedings, like any other form of litigation, inevitably involve cost and time commitments. The Court’s emphasis on efficiency and cost awareness can substantially alleviate that burden, but it does not remove it altogether. Parties should have a clear understanding of the value at stake and obtain focused advice early, before committing to proceedings. Given that an expert valuation is typically unavoidable and costs can escalate quickly, the decision to litigate should be approached with care, and genuine attempts to resolve disputes commercially should be pursued wherever possible.
If any of the issues raised in this article have struck a chord with what you, or others, may be facing in your business, or if you would like tailored advice on avoiding situations where an oppression proceeding may arise, please feel free to get in touch, we would be happy to assist.
- Fexuto Pty Limited v Bosnjak Holdings Pty Limited Matter No 3799/97 [1998] NSWSC 413. ↩︎
