Trading Trusts—Oppression Remedies: Report (html)

7. Conclusion

7.1 In Australia, trading trusts are often used as an alternative to companies as a way to structure businesses. This is true of small, family businesses as well as larger, more complex entities. Sections 232 to 234 of the Corporations Act 2001 (Cth) provide a range of remedies for shareholders of a company subject to oppressive conduct.

7.2 As discussed throughout this report, similar remedies are available to beneficiaries of a trading trust only in very limited circumstances. Even this largely relies on judicial reasoning that remains contentious and uncertain.[1] Beneficiaries who are not also shareholders in the corporate trustee have even more limited opportunities for redress.

7.3 The need for legislative reform is clear. The traditional doctrines of trust law have kept pace with neither the commercial realities of the 21st century, nor the use of trading trusts in contemporary Australia. The current oppression remedies in the Corporations Act do not provide a clear and comprehensive solution.

7.4 The Commission is pleased to have had the opportunity to consider, and make constructive proposals on, the implications of this for beneficiaries of trading trusts and the use of trusts by businesses in Victoria more generally.

7.5 The legislative amendments that the Commission recommends in this report are a proportionate and targeted response to gaps and uncertainty in the current law.

7.6 The recommended reform should provide beneficiaries with a fairer, more certain way to seek redress when faced with oppressive conduct. However, given the limits and flexibility of the recommended reforms, they should not place an unjustified or onerous burden on trustees, directors or third parties associated with the relevant businesses.

7.7 The Commission commends this report to you.

  1. See the discussion in Chapter 3.

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