Our Brisbane and Gold Coast commercial litigation team are experienced in all aspects of Shareholder & Partnership Disputes.
It is quite common for shareholder or partnership disputes to arise in business. It is imperative that a shareholder takes a proactive approach in order to achieve a desired and favourable outcome.
It is often the case that obtaining advice at an early stage can improve the position of a particular shareholder in respect of a dispute and preserve the value of the shareholder’s interest. Ordinarily, this is before the matter becomes aggravated so the shareholder can obtain advice in respect of a strategy.
Our team of specialist dispute lawyers regularly advise clients in relation to
Oppressive Conduct Claims
These claims are for minority shareholders who may have little, if any, ability to control the direction of a company. The Court has broad powers to regulate the conduct of a company’s affairs, if that conduct is contrary to the interests of, or oppressive towards, or unfairly prejudicial to, or unfairly discriminatory against, shareholders. Among other things, the Court can make orders modifying the company’s constitution, orders for the purchase of shares, orders restraining conduct or specified acts; the Court can even force a company into liquidation.
Equitable Shareholder Claims
The Court has a very broad discretionary power to wind up a company if it is just and equitable to do so. There needs to be a justifiable lack of confidence in the directors’ management of the company. Circumstances in which it might be just and equitable to wind up a company include where a company has failed in its purpose, where shareholders’ trust and confidence has broken down, and where there is a deadlock between shareholders.
Appointment and Removal of Directors and Board Members
Directors can resign by giving a company written notice and ensuring ASIC is notified that they have stopped being a director. Their resignation takes effect once ASIC is notified, unless ASIC is notified within 28 days of their resignation, or the Court makes an order fixing their resignation day.
Shareholders may by ordinary resolution, or by following another method under the company’s constitution, remove a director from office and appoint another person as a director instead. If the company is a public company, a valid resolution requires proper notice to first be given to the company, its director, and its shareholders.
Shareholders have the right to inspect a company’s share register, the right to a copy of the company’s constitution (subject to paying any fee), the right to attend shareholder meetings and vote on certain resolutions, the right to copies of minute books of shareholders’ meetings, the right to sell their shares (although the right to sell might be subject to restrictions), and the right to participate in things like share issues and buybacks. Shareholders with more than 5% of the votes in small proprietary companies can direct a company to prepare financial reports. Public companies are obliged to send financial accounts to all shareholders, except those shareholders who specifically tell the company not to do so. Some shareholders might be entitled to dividends, in the form of payments, the issue of shares, other options, or the transfer of assets.
Appointment of auditors or administrators
The directors of public companies are obliged to appoint an auditor of the company. The directors of proprietary companies also have an option to appoint an auditor for the company. Shareholders with at least 5% of the votes in a small proprietary company may direct a company to prepare audited financial reports and send them to all shareholders.
The board of directors may resolve to put a company into administration if the company is insolvent, or is likely to become insolvent in future. If the company is in liquidation or provisional liquidation, the company’s liquidator can also appoint an administrator. The purpose of an administration is to maximise the chance of the company continuing its business, and produce a better return for the company’s creditors and shareholders than an immediate winding up of the company. This purpose is generally achieved by preserving company property, preventing claims against the company and its property, identifying the company’s assets and liabilities, and comparing what would likely happen if the company was placed into liquidation with what would likely happen under any proposed deed of company arrangement.
Partnership assets and liabilities
The question of whether an asset is a partner’s or the partnership’s may turn on what is in the partnership accounts. Partnerships may acquire assets directly or they may be brought in by the partners, even if legal title has not been formally transferred. Conversely, assets used by a partnership to generate income are not necessarily partnership assets.
Partners are liable for all debts and liabilities of the partnership, but are entitled on dissolution to have partnership property applied in payment of those debts and liabilities. Partners cannot maintain an action for a separate balance on the partnership account or for any particular partnership asset until an account has been taken and settled by the partners or the Court. No partner has any right of action against another partner in respect of partnership property.
For these reasons, it is very important that the partnership agreement address what assets and activities are independent of partnership arrangements, how disputes are to be resolved, how partners enter and exit the partnership, and how the partnership may be dissolved.
In the event that there is litigation arising from a dispute between shareholders and office holders of a company, our firm is experienced and well-versed in litigation relating to shareholders disputes in all Courts throughout Australia.
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