Oppression and mismanagement under the Companies Act 2017

Petitions of this kind almost always arise in closely held or family companies. The complaining shareholders say they have been excluded from management, diluted through a rights issue timed against them, or watched the company's business drift to an entity the majority controls. The vehicle is a petition under sections 286 and 287 of the Companies Act 2017, the successors to section 290 of the Companies Ordinance 1984, filed by members who meet the shareholding threshold fixed in the statute [THRESHOLD UNDER SECTION 286 — TO BE VERIFIED]. The petition goes to the company bench of the High Court, which has exclusive original jurisdiction over it.

The line of authority under the predecessor provision, which the courts continue to apply to the 2017 Act, sets the standard. Oppression means conduct that is burdensome, harsh and wrongful toward the petitioner in his capacity as a member — a test the Pakistani courts adopted from the English authorities and have applied consistently since. Friction between shareholders is not enough. Loss of confidence must spring from unfairness in the conduct of the company's affairs, not from the petitioner's disappointment at being outvoted. Where the test is met, the court's remedial powers are wide: it may regulate the future conduct of the company's affairs, set aside transactions, remove officers, or — most commonly in practice — order one side to buy the other out at a fair value.

The practical rule, as of mid-2026: standing must be established at the threshold; the acts complained of must be pleaded with dates, documents and specifics rather than adjectives; and the petitioner must show injury as a member, not merely as a director or employee who has lost office. The company bench does not sit in appeal over honest business judgment. Interim relief — restraining a rights issue, a transfer of assets, or a change to the register — is available and is often where these cases are effectively decided.

Why it matters

Most Pakistani companies are private and most private companies are family concerns. When relations break, this jurisdiction is usually the only realistic exit for a minority shareholder, and the buy-out order is usually the destination. Shareholders' agreements and articles should be drafted with this line of authority in view — because when the documents are silent, section 286 is what fills the silence.