Shareholders disputes can be a common occurrence in Australian companies. Disagreements between shareholders can arise for a variety of reasons, such as differences in opinion on the direction of the company, allocation of profits, management decisions, and corporate governance issues. In this article, we will explore shareholder disputes in Australia and the legal consequences that can arise.
Legal Consequences of Shareholder Disputes
1. Breach of shareholders agreement
A shareholders agreement is a contract between shareholders that outlines their rights and obligations. Breach of the shareholders agreement can occur if a shareholder fails to comply with their obligations under the agreement. For example, if a shareholder fails to contribute their agreed capital or acts outside their authority, it may lead to a breach of the shareholders agreement.
2. Oppression proceedings
Oppression proceedings can be brought by shareholders who believe that they have been unfairly treated by the company or other shareholders. This can include situations where shareholders are denied access to information, are excluded from decision-making processes, or where their rights as shareholders have been infringed upon.
3. Derivative actions
A derivative action is a legal action brought by a shareholder on behalf of the company. Derivative actions can be brought where the company has suffered harm due to the actions of directors or other shareholders, and the company has failed to take action.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances. Madgwicks is a member of Meritas, one of the world's largest law firm alliances.