Legal Advice

Shareholder Disputes can Lead to Protracted Court Battles

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Shareholder Disputes

Early Valuations can put you in an Empowered Position

Shareholder disputes are more common than we like to think and often prove disruptive to a business; in fact, it would be fair to suggest that a serious dispute can bring a successful business to its knees. Expert commercial lawyers can help perform early valuations and this helps pave the way for quick and efficient resolutions. Independent valuations of your shareholdings can strengthen bargaining power and there is higher likelihood of getting what you deserve. There can be several circumstances that can lead to a shareholders dispute. Differences of opinion may arise between the parties involved and the dispute could involve:

  • Shareholders and directors of unlisted companies
  • Shareholders and directors of proprietary limited companies
  • Partners in a business partnership or trust
  • Conflict between controllers of a business entity regarding management, finance, operation or other issues

At the core of any shareholders’ dispute is usually a struggle for control as well as the resultant benefits that can be expected from the control. Shareholder disputes may arise due to relationships gone sour, differences of opinion regarding succession, operation, finance or families could be mired in a dispute for future control of the business. At times, when shareholders fall out, they may complain of unprofessional handling of company affairs or even allege fraud. In such cases, it’s always better to seek efficient legal services in order to explore methodical and systematic solutions to legal problems.

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Legal Advice

Company Shareholder’s Rights to Dispute

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shareholder-disputes

Those who own shares in any proprietary company (which means it has a “Pty Ltd or P/L in the name”), might have right that they are not aware of. This could include the right to access certain information regarding the company. It could also include the right to ask the company to hold a meeting of its members, which would be done under specific conditions.

Any company that does not follow through in providing what shareholders are entitled to, might be subject to dispute between members and the company, including the directors which could require experienced commercial lawyers like Lynn and Brown Commercial Lawyers to sort out. Some of these disputes about rights might include the following:

  • Not enough general meetings.
  • A company not acting in the best interest of the members.
  • Not providing access to the company’s register.
  • Legal action being brought against directors by members.

The constitution of a company details what the company has the right to do, and what it is obliged to do, including the rights and obligations of directors, officeholders, and members. In this manner, the constitution works similarly to a contract, but a breach of it is not a criminal offence. Private actions must be taken in order to enforce this contract. Disputes need to be settled by the parties, but the court system can be involved when this fails to happen.

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