Disputes between shareholders and directors of companies can arise regardless of the size of the company or for how long it has been in business. These disputes can disrupt business, are often complex and can be costly, so it is important to obtain legal advice which gets to the heart of the issue as soon as possible.

The shareholder dispute lawyers at PCL Lawyers have extensive experience in representing shareholders and directors in a wide range of matters including:

Disputes with other shareholders or directors
Breach of shareholder agreements
Directors’ duties
Shareholder oppression
Litigation

If you are in a dispute with another shareholder or director, please contact us today to explore your legal options and discuss your matter further. Obtaining legal advice at the outset of a dispute can help to resolve the issue quickly and at a minimum of costs.

Breach of shareholders agreement

Shareholder agreements are contracts which set out the rights and obligations of each shareholder, and the company is required to take certain actions. This includes how parties agree to act when disputes arise, which normally allows for issues to be refined and negotiated at an early stage in mediation or conciliation, saving cost and time.

When shareholder disputes arise in companies that do not have an existing shareholder agreement, it will be determined in accordance with the common law. We recommend that every company have a shareholders agreement in place, and can prepare an agreement for companies that do not have an existing shareholders agreement.

Disputes with other shareholders or directors

Disputes between the shareholders or directors of a company can arise for a diverse range of reasons. They are distinct from other disputes because the parties have often worked together closely for some time and have a shared interest in the success of the company.

Disputes most often arise when:

A director has breached their duty to the company
A party is acting in breach of a shareholder agreement
Payment of a dividend is being withheld
The company is not complying with its disclosure obligations to shareholders
A member of the company has failed to produce a company record
A party is being excluded from company meetings
A shareholder was not given proper notice of a shareholder meeting
A party has committed fraud or is acting dishonestly
One shareholder is oppressing another by not acting in the best interests of all shareholders
Shareholders disagree about the direction of the company, the financial performance of the company, or how it is being managed

Breach of shareholders agreement

Directors’ duties

Directors of a company have overriding (or fiduciary) duties to act in the best interests of the company and its shareholders. Some of these duties impose the requirement that a director acts in good faith, exercises their powers honestly and for a proper purpose, does not seek to gain a personal advantage from their position, and keeps the company’s affairs in order. Fiduciary duties require directors to maintain a high standard of conduct and act in a way which benefits the shareholders.

Shareholders may take action against directors acting in breach of any of their duties and seek damages for the director’s breach, or even to obtain urgent relief to prevent the dissipation of a company’s assets.

Shareholder oppression

In our experience, shareholder oppression is one of the most common claims raised in a dispute between shareholders, and with which our lawyers have extensive experience.

Shareholder oppression occurs when a majority shareholder or group of shareholders use their larger share in the company to prejudice or disadvantage minority shareholders. Oppressive conduct can take many forms; in our experience, it typically involves the largest shareholder or shareholders controlling the company in a way which harms the interests of minority shareholders.

Shareholders who are the victim of oppressive conduct may apply to the court for relief. The Court may make the following orders relating to, or resulting in any of the following:

The winding up of the company
Modification of the company’s constitution
Regulating the conduct of the company’s future affairs
Requiring a shareholder to purchase the shares of another
Relieving an oppressed shareholder of their obligations to the company
The company being given leave of the court to initiate proceedings
Authorising a shareholder to prosecute, defend or discontinue legal proceedings
Appointing of a receiver or a receiver and manager over any part of the company
Restraining of a person from engaging in specific conduct (also known as an injunction)
Requiring a person to do a specified act (also known as specific performance)

Court based litigation

Obtaining legal advice from one of PCL Lawyers’ experienced litigation lawyers as early as possible can ensure you obtain the best possible outcome. Our experience acting in shareholders disputes shows that there is more than one option available to resolve a dispute, and we are experienced in negotiating settlement outcomes which resolve disputes and allow companies to get back to business as usual.

However, where parties cannot agree, it may be necessary to obtain court orders to force a party to act in a certain manner. In the event that litigation is necessary, our lawyers are and experienced in commencing and defending litigation brought by shareholders against companies, directors and other shareholders.

The law can be extraordinarily complex in this area, and early legal advice can help you to make informed decisions and develop strategies to resolve the dispute quickly and effectively.

PCL Lawyers has extensive experience acting for shareholders and SME’s in complex disputes. We look for cost-effective ways to resolve disputes as early as possible and give sound advice about your options.

Whether you are a minority shareholder or have a major stake, you will want the best outcome that meets your interests. Our shareholder dispute lawyers can provide concise and commercially sound advice to help you resolve your matter.

Frequently Asked Questions

Court based litigation
If a shareholder dispute goes to court, a judge has a wide range of powers to make orders including

Court based litigation

The law can be extraordinarily complex in this area, and early legal advice can help you to make informed decisions and develop strategies to resolve the dispute quickly and effectively.

If a shareholder dispute goes to court, a judge has a wide range of powers to make orders including

An order winding up the company
Appointing a receiver or manager over all or part of the company
Orders modifying the company’s constitution
Orders that one shareholder purchase the shares of another
Orders that the company is to engage in or discontinue legal proceedings
Granting an injunction, having the effect of restraining a party from doing a certain thing
Orders requiring a person to do a specific act

Let Us Help - Reach Out to Us Now

Located in Melbourne, Sydney & Brisbane, our litigation lawyers have extensive experience representing clients in various courts and tribunals. We have successfully assisted numerous individuals and SME’s to resolve shareholder disputes.

For further discussion, please contact us at 1300 907 335 or fill out the contact form on this page. We will promptly respond to your inquiry.

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