QUESTION ONE:

Karen holds 20% of the shares in Cumana Ltd and Marina and Neville hold the remaining 80% of the shares. Marina and Neville are the directors of the company. Karen subscribed to her shares when the company was first incorporated on the basis that the majority shareholders (Marina and Neville) would always consult with her on major matters pertaining to the operation of the company and the distribution of profits

However, Karen has become aware of the following information. First, Marina and Neville have agreed that Cumana Ltd will expand from its Wellington base and set up branch offices in Hamilton and Auckland. These decisions were not discussed with her. Secondly, she has become aware that the directors had recently voted to increase the share capital of the company, but Karen was not offered new shares. The effect of this will be to reduce her stake in the company. Finally, she has learnt that both Marina and Neville who work for the company are receiving very large salaries compared to the relative worth of the company's business and that the board had decided not to issue a dividend this year.

Karen comes to you for advice. You tell her that she may be able to apply to the court under s 174 based on oppressive, unfairly prejudicial or unfairly discriminatory conduct. She asks you to explain the action to her.

Required:

Provide advice to Karen. Your letter should include an explanation of what the terms 'oppressive, unfairly prejudicial or unfairly discriminatory' mean in this context, as well as thepotential acts of oppression, prejudice and /or discrimination. Your answer should also briefly advise Karen what remedy she should seek if the Court agrees that she has been oppressed or prejudiced and why.

https://www.legislation.govt.nz/act/public/1993/0105/latest/DLM320835.html?search=sw_096be8ed81c915f2_174_25_se&p=1&sr=2

Key law cases;

Re HR Harmer Ltd[1958] 3 All ER 689

Thomas v HW Thomas Ltd [1984] 1 NZLR 686

UK case Ebrahami v Westbourne Galleries, court in that case ordered liquidation)