The Gambotto principles (requiring proper purpose and non-oppressive exercise for expropriation of minority shares) do not apply to selective capital reductions under Part 2J.1 of the Corporations Law (now Corporations Act 2001), because the legislature created its own comprehensive protective code including the fairness and reasonableness test, disclosure requirements, and class meeting veto. Section 256D(2) provides that once a capital reduction is made, its validity is not affected by contravention of s 256B(1), even where the required separate class meeting was not held. The statutory test of fairness and reasonableness to shareholders as a whole does not require that the full pecuniary value of 'special benefits' flowing from the capital reduction be allocated exclusively to the minority shareholders whose shares are cancelled; a pro rata allocation may be fair and reasonable.
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