Equitable limitation on majority voting power

Annotations:

• Where majority takes action beyond their power, it is for improper purpose.  (some actions breaching equitable limitation might even cause oppression on minority, ch2E)    

1. Cases NOT involving amendment of constitution
   1. Majority use voting power to take away company property Menier V Hooper's Telegraph Works (p.184)
   2. Majority use voting power to prevent being sued by company Baila Pty Ltd v Mallina Holdings Ltd (No2). (p.184)
2. Cases involving amendment of constitution (member approval required s136) Gambotto v WCP Ltd (p.186)
   1. Category 1: Amendments to allow expropriation of shares or valuable rights
      1. Requirement 1: Proper purpose
         1. Minority SH competing with company
         2. Necessary to comply with legal requirements
         3. Enhance commercial interests not proper purpose but is company purpose
            1. Requirement 1: Company purpose.
      2. Requirement 2: Fair and no oppression
         1. Procedural Fairness ➢ Fully disclose all relevant information regarding amendment (purpose, why alternatives not adopted). ➢ Obtain and disclose an independent expert’s valuation of shares to be expropriated.
         2. Substantive Fairness: ➢Price of shares to be expropriated must be fair.
   2. Category 2: Other amendments involving 'conflict of interest'.
   3. Gambotto DOES NOT apply to Selective capital reductions carried out in accordance with statutory requirements (Winpar Holdings Ltd v Goldfields Kalgoorie Ltd) OR a Scheme of arrangement carried out in accordance with statutory requirements since statute already provides protecting to minority SH.