Understanding of Shareholder and Partnership Issues

Partnership Issues

Looking for Clarity and Greater Understanding of Shareholder and Partnership Issues? Dedicated Lawyers can you Assert your Rights

Setting up and operating a business can be an exceedingly complicated process. Dedicated commercial lawyers can help you set up partnerships, obtain clarity on shareholder disputes and resolve legal problems related to business agreements. The success of a new venture often depends on greater understanding of the legal ground rules that govern business operations in Australia. In the beginning, most partners (who may also be family members or friends) are excited and enthusiastic about the prospect of getting a successful business off the ground. However, it is crucial to have written contracts drawn up so that partners can explore the future vision of the company within the proper legal framework.

One of the most significant building blocks for a successful venture is a written and well-structured shareholder’s agreement. A well-prepared and comprehensive shareholder’s agreement helps the business run smoothly. A shareholder agreement is especially useful in the event of a dispute or difference in opinion or even in case of doubt. Although the contents of shareholders’ agreements would vary across businesses, the following list typically describes some important information that is usually included in general:

  • The rights and responsibilities of majority and minority shareholders, company directors and officers
  • Inclusion of protective procedures that helps ensure that directors and officers are working towards the best interests of the company (and therefore the shareholders).
  • Arbitration, conflict resolution, mediation and so on
  • The addressing of legal action in the event of fraud, illegal business activities, leaking of sensitive information and unfair competition and so on
  • The sale and purchase of stocks and assets, corporate restructuring, mergers, acquisitions and takeovers etc

Other issues that may be described include debts settlement, breach of fiduciary duties, insolvency and bankruptcy. As the business grows over time, challenges and problems can turn into potential threats if there are internal disagreements among the management and shareholders. Internal disputes, bickering and arguments among shareholders can demoralise the business as well as stifle its growth. Moreover, if corporate disputes are carried over to the court, the process is expensive, long drawn and often inequitable.

In addition to these disadvantages, the legislative remedies for shareholder disputes are limited. In fact, in worst case scenarios, protracted court battles can leave a business drained of its assets and render it bankrupt. Nobody really wins in this kind of situation. Reputed legal counsel will be much better placed to help you examine proactive solutions and promote dispute resolution outside the courtroom.

Carefully structured shareholder agreements coupled with experienced legal counsel can help prevent internal company disputes from spiralling into prolonged courtroom battles. Thus, business and shareholder conflicts can be resolved efficiently, cost-effectively and creatively.

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