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A shareholder’s contractual right to a dividend and a company’s oppressive conduct in withholding dividend payments: Sumiseki Materials Co Ltd v Wambo Coal Pty Ltd

Du Plessis, Jean and Alevras, Stephen 2014, A shareholder’s contractual right to a dividend and a company’s oppressive conduct in withholding dividend payments: Sumiseki Materials Co Ltd v Wambo Coal Pty Ltd, Company and securities law journal, vol. 32, pp. 552-559.

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Title A shareholder’s contractual right to a dividend and a company’s oppressive conduct in withholding dividend payments: Sumiseki Materials Co Ltd v Wambo Coal Pty Ltd
Author(s) Du Plessis, Jean
Alevras, Stephen
Journal name Company and securities law journal
Volume number 32
Start page 552
End page 559
Total pages 8
Publisher Thomson Reuters
Place of publication Sydney, N.S.W.
Publication date 2014
ISSN 0729-2775
Summary Traditionally, a shareholder’s expectation of receiving a dividend has been limited by the discretion the board of directors has to recommend the appropriate amount of payment as a dividend. As a general rule, shareholders will only be entitled to a dividend after the dividend is declared (normally, at the general meeting), or when the actual date arrives for the dividend to be paid. Because courts were traditionally reluctant to interfere with the internal management of companies, the remedies available to shareholders to compel a company to declare a dividend were very limited. As a result, if the directors have decided to withhold dividend payment, courts will only make an order requiring dividends to be paid under very exceptional circumstances. In this article, the authors discuss the case of Sumiseki Materials Co Ltd v Wambo Coal Pty Ltd [2013] NSWSC 235, which is exceptional for the court’s recognition of a shareholder’s contractual right to a dividend. The article analyses the court’s approach, which found that withholding dividend payments was oppressive and unfairly prejudicial conduct of the company. It also discusses the significance of shareh9olders entrenching their rights in a company’s constitution, irrespective of the fact that a company has a statutory right to alter its constitution by way of a special resolution.
Language eng
Field of Research 180109 Corporations and Associations Law
Socio Economic Objective 940405 Law Reform
HERDC Research category C1 Refereed article in a scholarly journal
ERA Research output type C Journal article
Copyright notice ©2014, Thomson Reuters
Persistent URL http://hdl.handle.net/10536/DRO/DU:30067335

Document type: Journal Article
Collection: Law
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