Corporate Law Case Study: Tim and His Brothers

Running head: CORPORATE LAW
CORPORATE LAW
Name of the Student:
Name of the University:
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1CORPORATE LAW
The present case study deals Tim and his four brothers who had formed a private
company name ‘The Grumpy Grande Pty Ltd’ or the TGG in the year of 2010. The business was
for bringing in premium quality of coffee, brewed fresh from the minivan back directly to any
social gathering, corporate or sports event. The business gained instant popularity and success
and the profits were equally shared by all the Brown brothers. The constitution of the company
held that all the 5 brothers are the directors as well as shareholders of the company and there will
be no one from outside into the business.
However, in the past few years, the business was doing well and the business started
slowing down. It was not getting profits like before and this resulted into deterioration of the
brotherly relationship among them. The eldest 4 brothers suspected that Tim was about to leave
their business due to its lack of success, and thus they were bullying Tim. They were even using
all the opportunities to use their majority vote to block the business ideas of Tim. They even tried
to sell the company assets of value at bargain rates to themselves in spite of the fact that Tim
strongly protested against it. Though the constitution of the company provides all the decisions
must be taken by the majority vote, still the 4 brothers were misusing it against Tim.
As per the constitution of the Company, if any of the brothers wants to sell his share, he
has to do it after getting permission from the other brothers who are also the directors of the
company. Moreover, if that person gets assent from other directors to sell his share, still there
lies one more condition that he has to sell it to themselves only. Hence, if one director wants to
sell his part of or total share, the others directors are required to buy them by providing him
appropriate cost.

2CORPORATE LAW
But, Tim secretly hears the conversation of his eldest brother taking over the phone. As
per the conversation of the phone, Tim was able to understand that they planned to prohibit him
from selling his shares by using their majority vote. He even heard that they planned to
forcefully make him leave the business without paying for value of the shares. Due to this, Tim
was under stress and dissatisfaction and wants to claim for statutory and equitable remedies for
him against his 4 brothers.
In this regard, light must be thrown on the provisions of the Corporations Act 2001 to
allow Tim to get suitable remedy. It is known that the companies are usually controlled by a
single share holder or a class of share holders. Those who hold the majority of the shares are able
to control the activities of the company. Hence, the share holders who hold minority votes are in
actual have very little or no control and influence on the management of the company. Tim was
subjected to deprivation by the majority share holders who are actually his own brothers.
To combat with this problem, the Parliament and the courts have taken this problem very
seriously and aimed to provide protection to the minority share holders and due to this enacted
section 232 of the said act. This section allows several remedies that a member of a company can
seek under section 233 of this act. Section 234 of the act gives the persons who can apply for an
order under section 232 of the act. In the case of Niord Pty Ltd v Adelaide Petroleum NL (1990)
54 SASR 87, it was held that a member who has been registered in the company can apply under
section 232. Hence here Tim can apply to the court for an appropriate remedy.
In order to claim for oppression and unfair discrimination, it has to be shown that the affairs
of the company was conducted in the manner that was in all the situations was oppressive to or
unfair or prejudicial or unfairly discriminatory against a member or a group of members as per