The shareholders of an incorporation can apply for an investigation into the management of the business of an incorporation if:
- those shareholders together hold at least 10% of the overall shares in the Incorporation, or
- a special resolution was passed by a general meeting of shareholders that the management of the business of the incorporation should be investigated.
As a court, we have very broad investigative powers and may appoint examining officers to conduct a full review of any part of the incorporation. An investigation of this nature is rare, but can occur if the management committee doesn't follow good business practices. Examples of poor business practice include:
- counting and auditing practises that depart from standard requirements.
- A long-term pattern of poor returns from activities, such as farms that run at a loss.
- The land is not being well managed.
- Management is not providing shareholders with accurate and timely reports, e.g. AGMs are not being held.
The judge may also order any person to provide copies of records, reports, and reasons for decisions related to the incorporation, and to assist the examining officers with their review.
The judge may also order any person to provide copies of records, reports, and reasons for decisions related to the incorporation, and to assist the examining officers with their review.
When a judge receives the report from the examining officer, they may hold a court sitting to make further inquiries and if necessary:
- remove a member from a committee of management
- appoint a person to the committee of management
- suspend any powers of the committee or management and appoint any person(s) to exercise that power
- impose any restrictions, conditions, or exceptions on the powers of the incorporation
- give any directions as to the management of the business of the incorporation
- suspend any or all provisions of the constitution of the incorporation
- order the winding up (dissolution) of the incorporation, and/or
- refer any matter to the Attorney-General to consider formal charges be brought and prosecution pursued against any person(s).
These powers will only be exercised in extreme cases where a judge is satisfied that it’s necessary.
In your application, you’ll need to provide:
- evidence that those persons holding at least 10% of the shares in the incorporation seek an investigation or
- evidence that a special resolution was passed at a general meeting of the shareholders seeking an investigation
- the grounds upon which an investigation is sought, and
- any matters that should be brought to the immediate attention of a judge.
A request for an investigation should not be taken lightly. We suggest that you seek independent legal advice before applying.
Apply online
Download the application form