Free Webinar – Shareholder disputes and separating a business

In this Webinar, Mark Northage will explore some strategies and mechanisms for shareholders separating and running their own race, while seeking to maintain the value of the business.

  • Closely held Pty Ltd companies often function like a partnership where shareholders are also directors (or are represented by a director who controls the shareholder)
  • Business partners can fall out when they disagree about:
    • how a business should be run day-to-day or its future direction
    • Retirement of a director/shareholder (or more than one) and how they will be remunerated for their stake; or
    • Conflicts of interest between the jointly held company and one of its directors or an entity controlled by a director.
  • Director duties bind each director and majority directors to act in the best interests of the Company and the shareholders as a whole and to act in good faith/avoid conflicts
  • But minority shareholders (or majority) may have legitimate interests which are not inconsistent with the best interests of the Company and shareholders eg.
    • Retirement due to age/ill health or
    • departure due to incompatible views
  • Easier to part ways if:
    • A Shareholders Agreement sets out protocols or mechanisms for disputes or departures; or
    • company trades through separate business outlets run by the respective shareholders and can be sold or separated into its component parts
  • Otherwise, market for an individual shareholder’s stake is potentially very limited:
    • Remaining shareholders buy departing shareholder’s stake for value (usually have pre-emptive rights)
    • find a buyer who will pay full value for stake and is acceptable to remaining shareholders
    • sell or wind-up the whole company
  • Deed of Separation
  • Self-help by majority shareholders consistent with director duties

Find out more and register for this free webinar.

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