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Gambotto v WCP [1995] 182 CLR 432

By Oxbridge Law TeamUpdated 04/01/2024 07:05

Judgement for the case Gambotto v WCP

Table Of Contents

  • Was proposed alteration to articles giving company power to buy out shareholders compulsorily.

  • Claimant, a minority member, sued on grounds that alteration was invalid.

Held

  • In expropriation cases, test from Allen is “inappropriate” 

  • Test should be whether alteration of articles is “beyond any purpose contemplated by articles or oppressive (as that term is understood in company law)”

    • And alteration will be for proper purpose where:

      1. Company is at risk of “significant detriment or harm”; and

      2. Act of expropriation is a reasonable means of alleviating that harm

    • Where this not case, resolution unlawful:

      • Even if minority is being compensated for their shares

      • Even if those in favour bona fide believe it is in best interests of company 

      • or even if alteration is actually for benefit of company!

    • Burden to show alteration is valid is on the majority.

    • This test better reflects the proprietary nature of a share.

Facts

  • Company gained tax advantages from buy out of Claimant’s shares, and Claimant himself would be better off if he were expropriated than if he were to remain a member of company.

  • Despite this, alteration invalid.

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