1.2.2 The oppression/unfair prejudice remedy

In many countries, along with the appraisal remedy, shareholders can ask to be bought out through the oppression remedy/ unfair prejudice remedy, or similar remedies that go by other names.1

The oppression remedy in the US, in a broad sense, is a counterpart of the unfair prejudice remedy in the UK.2

When the company's affairs are being or have been conducted in a manner which is oppressive or unfairly prejudicial to the interests of its members in general or of some of its members, or when any actual or proposed act or omission of the company is or would be prejudicial to such interests, the shareholder can bring a lawsuit before the court, and the most frequently granted foren of relief is a court ordered buyout. The aim of this remedy is, in essence, to constrain the behaviour of company officers and directors, because with this remedy, even lawful actions in conformity with law and with the company's constitution can be judged as oppressive or unfairly prejudicial to the interests of minority shareholders. Since the rule-makers cannot "identify in advance many substantive decisions which should be prohibited on the grounds that they will always be unfair to the minority",3 how to interpret the term "oppressive" or "unfairly prejudicial" is a crucial point of this remedy. Courts have to struggle between legal certainty and fairness with regard to this remedy.4

In brief, both remedies aim to protect the interests of minority shareholders. The appraisal remedy attempts to strike a balance between flexibility enabling corporate restructuring and the interests of minority shareholders.5 The oppression remedy attempts to balance the interests between majority shareholders and minority shareholders in a close company.