By DEAN JONES

Are you involved in a shareholder dispute?

Are you involved in a business dispute in a private company?

A shareholder dispute or business dispute in a private company may arise for many reasons. Some of the most common ones are because fellow shareholders, directors or partners:-

  • Are unreasonable and are too difficult to work with;
  • Are running the business as if it was their own;
  • Intend to issue further shares to dilute your shareholding;
  • Are trying to push you out;
  • Are not putting in the effort that they are supposed to, leaving you to do it all;
  • Are not prepared to pay you a reasonable amount to depart the business; or
  • Are demanding an unreasonable payment to depart the business.

    In these cases legal advice is needed before it is too late. You may not have a lawyer. The lawyer the company uses will probably have a conflict of interest and will not be able to help you. This is where our experience as commercial lawyers and business lawyers can help you. If the matter does not resolve by negotiation, we can discuss tactics with you as to how to best protect yourself. We can also advise you whether you can commence legal proceedings based upon oppressive conduct or breaches of director’s duties or alternatively whether you can bring an application to wind up the company.

    Some recent cases we have been involved in are:-

    • Two friends commenced a successful retail business but then had a falling out, resulting in a dysfunctional business. Court proceedings were issued by the other party and the matter settled;
    • Our client established a freight forwarding company with a co-shareholder. The business expanded rapidly. Two new shareholders invested in the company and shortly afterwards the other three shareholders then excluded our client from the business. Legal proceedings were issued by our client, leading to our client selling his shares and departing the business;
    • Our clients conducted a long established family business in the export sector. It then admitted an outside shareholder. This worked well for many years but eventually there was a falling out and the parties could not get along. The matter resolved by negotiation without legal proceedings being issued, with the non-family member selling his shares and departing the business;
    • We acted for one of two shareholders in a successful shop fitting business. There was a large age difference between the two. One believed the other was trying to change things too much. The other believed the new ways were better. They just could not get along. Legal proceedings were issued and the dispute resolved by the business being put on the market for sale;
    • Our client was one of the two founders of a software development company. It became very successful which led to the other founder attempting to undermine our client with clients and staff, with the aim of acquiring our client’s shares cheaply. The plan did not work. Legal proceedings were issued, our client was supported by the clients and staff and the result was that our client bought the shares of the co-founder.

      If you are in a position where you need advice about a similar position, contact our experienced commercial lawyers and business lawyers before it is too late.

      For more information, please contact Eales & Mackenzie Commercial Lawyers Melbourne on (03) 8621 1000 or email advisors@emlawyers.com.au.

      The contents of this publication, current at the date of publication set out above, are for reference purposes only. They do not constitute legal advice and should not be relied upon as such. Specific legal advice about your specific circumstances should always be sought separately before taking any action based on this publication.