Shareholder, partnership and joint venture disputes in Chinese-owned businesses
Reviewed by Justin Chua, principal, Chua Tan Associates · Updated 18 October 2026
When business partners fall out, the law gives a shareholder or partner real tools: access to the company’s books, an oppression claim under sections 232 and 233 of the Corporations Act 2001 (Cth), a derivative action in the company’s name, dissolution of a partnership, or winding up on the just and equitable ground. In practice most of these disputes end in a buy-out at a negotiated or court-determined value. What decides the outcome is usually the paperwork that exists (or does not), how the money went in, and how quickly you act.
What we see in these disputes
The pattern is familiar. Two or three friends, relatives or hometown contacts open a restaurant, buy a development site, or set up an import and export company. Money goes in as cash, through relatives’ accounts, or by transfer from China, Hong Kong or Malaysia. Shares are registered in whatever names were convenient at the time. Nothing is written down beyond WeChat messages. Years later, one person runs the business day to day, the others feel shut out, and nobody can agree what each person actually owns.
- Restaurants and retail: one partner works in the business and draws wages, the other contributed capital and now sees no profit.
- Property development joint ventures: funding calls go unmet, the project stalls, and lenders start to press.
- Family companies: parents hold shares with children or in-laws, and a separation or death in the family turns a family business into a contest.
Start with the documents
The first questions are always the same. Is there a shareholders’ agreement or joint venture agreement? What does the company constitution say (or does the company rely on the replaceable rules in the Corporations Act)? Who is on the ASIC register as shareholder and director? Many agreements contain deadlock clauses, pre-emption rights, valuation methods and dispute resolution steps such as mediation, and a court will usually expect those steps to be followed first.
Where nothing is in writing, the court looks at what the parties actually did: who paid what, what was said in messages, how profits were shared, and who was held out as an owner. Money contributed in cash or from overseas can still be proved, but it needs evidence. Bank records, remittance receipts, WeChat and email messages, and accountants’ working papers should be gathered and preserved early, with proper translations.
Your right to information
A director is generally entitled to access the company’s financial records. A shareholder has no automatic right, but can apply to the court under section 247A of the Corporations Act for an order to inspect the books if the application is made in good faith and for a proper purpose. Inspection often reveals whether money has been diverted, and it frequently changes the tone of negotiations.
The oppression remedy
Sections 232 and 233 allow a member to seek orders where the company’s affairs are conducted in a way that is contrary to the interests of members as a whole, or oppressive, unfairly prejudicial or unfairly discriminatory to a member. Typical conduct includes excluding a shareholder from management, cutting off information, paying excessive salaries to the controllers, diverting business to a new company, and issuing shares to dilute a minority. The court has wide powers, but the most common order is that one side buy out the other at fair value. A breakdown in the personal relationship, on its own, is usually not enough.
Derivative actions and director duties
Directors owe duties of care and diligence, good faith, proper purpose and not to misuse their position or company information (sections 180 to 183). If a director has taken money or opportunities from the company, the claim belongs to the company, not to the shareholder personally. Where the people in control will not cause the company to sue, a shareholder or director can ask for the court’s leave under sections 236 and 237 to bring a statutory derivative action in the company’s name.
Deadlock, winding up and partnerships
In a 50/50 company, deadlock is common. A court can wind up a company where it is just and equitable to do so (section 461(1)(k)), for example where the company is in substance a partnership between people who can no longer trust each other. Winding up is treated as a remedy of last resort because it often destroys value, and courts usually prefer a buy-out where the business is worth preserving.
If the business was never incorporated, partnership law applies. Under the Partnership Act 1958 (Vic), a partnership can be dissolved by agreement, by notice in some cases, or by court order, and the assets are realised and accounts taken between the partners. Disputes about whether a partnership existed at all, and on what shares, are common where nothing was written down.
Valuation and buy-outs
Most disputes resolve with one party buying out the other. The key issues are the valuation date, whether a minority discount applies (in oppression cases courts often decline to apply one), how to treat loans by shareholders to the company, and how the buyer will fund the price. An independent valuation, or an agreed valuer, is usually worth the cost.
Urgent steps and injunctions
If assets are being moved, a business is being transferred to a new company, or property is about to be sold, urgent injunctions are available in the Supreme Court. You must usually give an undertaking as to damages, so these applications need to be supported by solid evidence and brought promptly.
Costs exposure
In Victoria and NSW, costs generally follow the event: the losing party usually pays a substantial part of the winner’s legal costs, as well as its own. A plaintiff who lives overseas, or a company plaintiff that may not be able to pay costs, can be ordered to provide security for costs before the case proceeds. For partners based in China, Hong Kong or Malaysia, this can mean paying a significant sum into court or providing a guarantee at an early stage.
Cases worth knowing
- [Wayde v New South Wales Rugby League Ltd [1985] HCA 68](https://www.austlii.edu.au/cgi-bin/viewdoc/au/cases/cth/HCA/1985/68.html): the High Court described the oppression test as whether reasonable directors, considering the matter, would have thought the decision unfair. The lesson is that a decision you dislike is not necessarily oppressive; the court looks for commercial unfairness.
- [BAM Property Group Pty Ltd v Imoda Group Holdings Pty Ltd [2019] FCA 1192](https://www.austlii.edu.au/cgi-bin/viewdoc/au/cases/cth/FCA/2019/1192.html): three brothers ran a property business on an informal arrangement. One brother excluded another from management and information, took unauthorised payments and moved the business into a new company. The Federal Court found oppression and ordered him and his company to buy out his brother’s interests for about $711,000 plus interest.
- [CIP Group Pty Ltd v So [2022] FCA 1490](https://www.austlii.edu.au/cgi-bin/viewdoc/au/cases/cth/FCA/2022/1490.html): in a deadlocked property development joint venture, the Federal Court gave one venturer’s companies leave to bring a derivative action in the joint venture companies’ names against the other venturer and his lending company. Leave was conditional on indemnifying the companies for adverse costs and increasing security to $750,000.
What to do now
- Do not resign as a director or sign anything in a hurry; resignation can cut off your access to information.
- Collect your evidence of contributions: bank and remittance records, receipts, messages and tax returns.
- Write down the history while it is fresh: who agreed to what, when, and in which language.
- Check the ASIC register and the company constitution.
- Get advice before withdrawing money or changing bank signatories yourself.
How we help
Chua Tan Associates acts in shareholder, partnership and joint venture disputes in English, Mandarin and Cantonese. Where both sides are willing, a private resolution can be arranged through the Chinese Australian Dispute Resolution Centre (CADRC). Contact us on +61 3 9602 3988.
FAQs
I put in half the money but my name is not on the share register. Do I have any rights?
Possibly. You may have a claim that shares are held on trust for you, or that a partnership existed, but you will need evidence of what was agreed and what you paid. Act early, before records are lost.
Can the majority shareholder simply remove me as a director?
Usually yes, if the constitution and Corporations Act procedure are followed. But removal combined with exclusion from information and profits can support an oppression claim.
We own 50/50 and cannot agree on anything. What happens?
Check the shareholders’ agreement for a deadlock or buy-sell clause. If there is none, the realistic options are a negotiated buy-out, a court-ordered buy-out under section 233, or winding up.
My partner is in China. Can I still sue in Victoria?
Generally yes, if the company or the assets are here, though serving overseas parties takes time and must follow the court rules. If you are the one overseas and you sue, expect an application for security for costs.
Is mediation compulsory?
Courts in Victoria and NSW routinely order mediation in commercial disputes, and many agreements require it before litigation. A well-prepared mediation often produces a buy-out on better terms than a contested hearing.
Talk to us about your matter
Book a confidential consultation in English, Mandarin or Cantonese, or call +61 3 9602 3988.
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General information only, not legal advice. Every matter turns on its own facts. Reviewed by Justin Chua, principal, Chua Tan Associates.
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