Business people regularly come together as shareholders of a new or existing company to advance a joint venture. Mostly, things go smoothly and the relationship is mutually beneficial. There are times, however, when relationships sour (mostly over money) and the company comes to be dominated by one or two individuals. The less dominant shareholders can find the company’s affairs being run contrary to the interest of the shareholders as a whole or in a manner that is oppressive to, unfairly prejudicial to, or unfairly discriminatory against those shareholders. What to do?
The Corporations Act 2001 (Cth) contains provisions that allow shareholders who find themselves in this position, and without other options to resolve matters, to seek a range of orders through the relevant Court. For example, the Court can modify or repeal the company’s constitution. The Court can make orders regulating the company’s affairs. It can order one party to buy out another’s shares. It can restrain a person from engaging in certain conduct and it can require a person to do a certain act. In the worst cases, the Court can order the company to be wound up and a liquidator appointed.
Of course, seeking orders from the Court comes with stress, inconvenience and significant cost. At Everingham Solomons, we prefer our clients to take steps at the outset of their joint venture to talk with their joint venture partners about what will happen if a dispute arises and how such a dispute will be resolved. Dispute resolution mechanisms can be built in to a company’s constitution or a joint venture agreement that take the parties through informal settlement steps, a mediation and/or an arbitration before taking the option of seeking relief from the Court. With the help of a trained mediator and/or arbitrator, this can often see disputes resolved cheaply and efficiently or, if not, a plan developed for the parties to part ways without loss or future acrimony.
We have the expertise at Everingham Solomons to smooth your entry into business and your exit because Helping You is Our Business.
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