Free Webinar – Shareholder disputes and separating a business

by Andrew Lind on 27 May, 14

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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