Equal shareholders face similar difficulties to partners in a failing marriage when the corporate relationship faces an irreconcilable breakdown. This usually occurs where the parties fail to, or refuse to, share the love instilled in an initially entrusted business venture.<\/p>\n
Individuals embarking on these business ventures often do so full of confidence and trust, but with a considerable degree of naivety as to the future conduct of the business. Typically, the business relationship is considered more as a \u201cquasi-partnership\u201d rather than a larger corporate arrangement, and the parties are usually unaware of the consequences that will follow if, and when, the initial excitement dissipates and emotions conflict with the future conduct of the business.<\/p>\n
When the parties are on the precipice of corporate despair, sections 232 and 233 of the Corporations Act 2001<\/em> (\u201cthe Act<\/b>\u201d) provides a wide range of remedies available to aggrieved shareholders when the love leaves the room and where the shareholders have reached an intractable deadlock in their business affairs.<\/p>\n Under the Act, the most common relief relied upon to break this deadlock is the \u201coppression\u201d<\/i> remedy which applies to \u201coppressive, unfair and discriminatory conduct\u201d<\/i> on the part of one shareholder towards the other(s).<\/p>\n Several recent decisions of the courts have clarified the definition of \u201coppressive conduct\u201d and the relief that is available to an oppressed shareholder under the Act in resolving a dispute. In Munstermann v Rayward,<\/i> involving a closely held family business on the Gold Coast, and other recent decisions, some of the oppressive conduct contended between the parties included:<\/p>\n In Munstermann<\/i> and a recent decision of the Queensland Court of Appeal in Asia Pacific Joint Mining Pty Limited<\/i> v Allways Resources Pty Limited, the courts have confirmed the definition of \u201coppressive conduct\u201d and the relief that will be provided to an oppressed shareholder, if the following criteria are met:<\/p>\n In both Munstermann and Asia Pacific Joint Mining<\/i>, the court ordered that the oppressor shareholder buy out the oppressed shareholder\u2019s shares at a value decided by the court or by an independent forensic valuer. The respective companies were viable, trading well and with significant accountable assets, and therefore did not warrant a winding up order.<\/p>\n The courts will equally look at the unfortunate consequence of equal shareholder disputes as far as it concerns the prevention of business paralysis or the stagnation of corporate prosperity, the diminution of business profits, a down-valuing of stock, assets and good-will and the avoidance of a continued erosion of trust and respect between the parties, which further impairs the ongoing viability of the company.<\/p>\n Protracted litigation can be avoided by the parties entering into a carefully drafted shareholders\u2019 agreement. This is always the most preferable course notwithstanding the parties\u2019 initial trusting and enthusiasm in embarking on a new and life-changing venture.<\/p>\n This agreement should contain provisions to enable the timely resolution of seemingly inescapable shareholder deadlock disputes. Such provisions should include the ability of one shareholder to acquire the shares of the other in accordance with an accepted independent valuation. The agreement should also include referral to an independent arbitrator or other avenues of dispute resolution.<\/p>\n Quinn & Scattini Lawyers\u2019 \u5546\u4e1a\u7ea0\u7eb7<\/a> Team has what it takes to move quickly and protect your commercial interests and have the expertise required to effectively identify, address and resolve shareholder disputes across all types of industries.<\/p>\n Get the best representation. Contact Quinn & Scattini Lawyers’ experienced business dispute lawyers on 1800 999 529<\/a>, email mail@rmold.newwebsite.live<\/a> or submit an enquiry below.<\/p>\n\n
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