Shareholder oppression - when relationships sour

When doing business with anyone, mutual expectations must be agreed upon. If minority investors are to become part of your organisation the rights and responsibilities of those investors should be clearly set out in shareholder agreements and be well known and understood by the parties.

Take the recent case of BBHF Pty Ltd v Sleeping Duck Pty Ltd & Ors [2024] VSC 320. This is a case where an investor launched a Supreme Court action against the company alleging oppressive conduct of a minority shareholder. In that case, a minority investor agreed with the founders to give the company ten months worth of work, for which he would receive 10% of the founder's shares. It was later agreed that he could receive a further 10% under the terms of a call option deed. The investor was a former medical practitioner but a current entrepreneur, and the company was a manufacturer and online retailer of mattresses.