Question

Explain why the shareholder succeeded in defeating the actions of the company in Gambotto v WCP Ltd (1995) 182 CLR 432. Your answer must be supported by legal reasons.

Answer 1

SOLUTION

WHAT WAS THE FACT OF THE CASE

IELtd was holding majority of shares 99.7% of WCP Ltd .Gambotto was a minority member in WCP Ltd . IE Ltd was interested in making  WCP a wholly owned subsidery in order to gain benefits regarding administration and for tax benefits . IE Ltd want to acquire minority interest held by Gambotto and Elina Sandri . Both were holding 50590 minority interest .IEL wanted to amend company constitution to let a shareholder with more than 90% shares forcibly acquire a minority interest .

ISSUE IN CASE

The issue in the case was could the constitution of the company can be altered so as to provide power to majority members with such power as to force minority members to sell their minority interest .

DECISION GIVEN BY COURT

The decision given by court clearly mention that the constitution amendment was invalid . The court rejested the Allen's test of bona fied and in the interesrt of the company as awhole as an appropriation test for assessing alternations to the constitution .Where aproposed amendment does not confer power to take the ownership rights of minority .

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