LAWS2203 Lecture Notes - Lecture 11: Intimate Relationship, Unfair Prejudice In United Kingdom Company Law
Compulsory Liquidation Remedies s 461
(1) The Court may order the winding up of a company if:
(a) the company has by special resolution resolved that it be wound up by the
Court; or
(d) the company has no members; or
(e) directors have acted in affairs of the company in their own interests rather
than in the interests of the members as a whole, or in any other manner whatsoever that
appears to be unfair or unjust to other members; or
(f) affairs of the company are being conducted in a manner that is oppressive or
unfairly prejudicial to, or unfairly discriminatory against, a member or members or in a
manner that is contrary to the interests of the members as a whole; or
(g) an act or omission, or a proposed act or omission, by or on behalf of the
company, or a resolution, or a proposed resolution, of a class of members of the company,
was or would be oppressive or unfairly prejudicial to, or unfairly discriminatory against, a
member or members or was or would be contrary to the interests of the members as a whole;
or
(k) the Court is of opinion that it is just and equitable that the company be
wound up.
‘s 462(2)-standing in s 461’
1) A reference in this section to an order to wind up a company is a reference to an order to
wind up the company on a ground provided for by section 461.
(2) Subject to this section, any one or more of the following may apply for
an order to wind up a company:
(a) the company; or
(b) a creditor (including a contingent or prospective creditor) of the company;
or
(c) a contributory; or
➢ s 9 - a person who is liable as member or past member (within 12
months - s 521) to contribute to the property of the company if it is
wound up, and a holder of fully paid shares in the company
(d) the liquidator of the company; or
(e) ASIC pursuant to section 464; or
…….
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‘section 461(1)(e)’
Directors acting either:
1. in their own interests; or
2. in a manner that appears to be unfair or unjust to other members
Re Cumberland Holdings
• The NSWSC held that the 1st limb may be argued in any situation where the
directors prefer their own interest to those of one or more members
• Enough if majority of the directors acted in that way (1 st Limb)
• The second limb is considered by looking at its effect on 'any significant body of
other members'
‘ s 461(1)(f)&(g)’
Where affairs of the company amount to oppression, unfair prejudice, unfair discrimination,
contrary to interests of members as a whole
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‘s 461(1)(k)’
Just and equitable ground
• Each application will depend upon the circumstances of the particular case: ASIC
v CME Capital Australia
• Where a member order for winding up on this ground, the court is required to be
satisfied there is no other remedy available and the applicant is not acting
unreasonably in seeking winding up instead of pursuing that other remedy ( s
467(4))
• Much cases arguing on this ground involve small closely-held companies more
like incorporated partnerships
Cases for ‘just and equitable ground’
‘Quasi-partnership’
Ebrahimi v Westbourne Galleries
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