Director & Shareholder Dispute Lawyer
Shareholder and director disputes can have severe consequences and significantly disrupt a company’s operations. When you need professional legal advice about company disputes, our team of litigation and shareholder dispute lawyers and accredited mediators can assist. We have the experience to help you institute proceedings to resolve disputes and seek the orders you require in the event the matter cannot be resolved.
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Gold Coast’s Leading Director & Shareholder Dispute Lawyers
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Understanding Director & Shareholder Disputes
A company is a separate legal entity, distinct from its shareholders and directors. The directors control the company while shareholders are its owners and invest in its equity. The relationship between these two groups is crucial for the smooth functioning of the company, however, disputes can occur when there is disagreement or conflict over an actual or proposed act among shareholders or between shareholders and directors.
Disputes Between Directors & Shareholders Often Arise From:
- breach of directors duties
- the company’s strategy & management
- withholding of dividends
- disparities between salaries and profit dividends
- separate business interests
- fraud
- failure to provide financial, accounting and statutory information
- exclusion from meetings and management
- breaches of shareholder’s agreements
Regardless of what led to the dispute, engaging the services of an experienced shareholder dispute lawyer is essential when facing these complex legal matters.
Effective dispute resolution aims to protect the interests of the company and its shareholders while ensuring compliance with legal and regulatory frameworks, including but not limited to, the Corporations Act 2001 (Cth) and the Australian Securities and Investment Commission Act 2001 (Cth).
Marino Law can advise you about your rights and obligations in dealing with director and shareholder disputes. Our team is adept at employing negotiation, mediation, or aggressive litigation strategies as needed to achieve favourable resolutions.
Take your first step to expert legal advice today. Let our team listen and provide you with advice and get you the best outcome.
REQUEST APPOINTMENTWhat Is A Shareholders Agreement?
Whilst not required at law, we strongly recommend the shareholders enter into a shareholders agreement. A shareholders agreement addresses issues such as the funding, structure, management and direction of the business, the responsibilities and obligations of the business owners, share transfers and how a shareholders dispute is to be resolved.
A shareholders agreement is an essential tool which can often prevent disputes and safeguard your business interests and hard-earned company assets. Marino Law stands ready to assist our clients in drafting shareholders agreements with precision and expertise to ensure fair outcomes and protect the company’s integrity.
Why Do You Need A Shareholders Agreement?
Generally, shareholders agreements contain terms that outline rights and duties of the shareholders. The parties agree on how to proceed in situations of disagreement, allowing issues in the dispute resolution process to be refined and resolved at an earlier stage.
When shareholder disputes arise between businesses without a shareholder’s agreement, it is more likely the parties may require the court’s intervention. Our Gold Coast business dispute and commercial litigation lawyers can draft agreements for any company that doesn’t have a shareholder agreement in place.
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Experienced
Multi-award winning, highly qualified and experienced team of legal professionals.
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Recognised as leaders in our specialised areas of practice of business and personal law.
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Practical solutions, strategic legal advice and a track record of success.
Affordable
Access premium legal services at Marino Law’s cost effective rates.
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Marino Law can handle all of your personal and business law requirements.
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Easily accessed with easy parking, find Marino Law on the highway at Mermaid Beach.
Resolving Shareholder Disputes
Our team of litigation and dispute resolution lawyers and accredited mediators can help facilitate the resolution of a shareholder dispute through negotiation, mediation or other forms of dispute resolution.
At Marino Law, we understand the inevitability of unforeseen circumstances in any business. Shareholder agreements delineate the course of action during a dispute, with possibilities ranging from buy-outs and mediation to wind-ups.
Our experienced lawyers will examine all options available to you pursuant to the shareholders agreement and under the Corporation Act. The proposed resolution may even inspire a modification of the company’s constitution regulating the conduct of the company’s future affairs.
Disputes Between Shareholders & Directors
Conflicts between company directors are not uncommon. Leaving disputes unresolved or failing to expeditiously work towards resolving such disputes can seriously adversely impact business operations. These types of disputes can also threaten the rights of individual investors. Our lawyers have extensive experience in the field of shareholders disputes which helps us to resolve disputes effectively.
Shareholder Relief From The Court
A shareholder can also seek relief from the court in certain circumstances. Section 232 of the Corporations Act provides that the court may make an order in relation to a director/shareholder dispute if it is found that either of the:
- conduct (includes proposed conduct) or omission, by or on behalf of a company, or
- the resolution proposed by the company is contrary to the interests of shareholders or amounts to oppressive, unfairly prejudicial or unfairly discriminatory conduct against its member(s).
Some examples of oppressive conduct include:
- an unfair allocation or restrictions on the payment of dividends to particular shareholders
- refusing access to information about the company’s affairs
- use of company funds for improper purposes – for example, personal expenditure
- majority shareholders controlling the company in a way which harms the interests of minority shareholders
- denying other directors the opportunity to carry out their functions
- paying excessive remuneration to the person having control of the company
Section 233 of the Corporations Act grants the court a wide scope of powers to make orders it considers appropriate if it finds there has been shareholder oppression, including:
- winding up the company on just and equitable grounds
- making orders regulating the conduct or affairs of the company in the future
- ordering the purchase of the shares of any member by other members
- ordering the company to institute, prosecute, defend or discontinue legal proceedings, or authorising the institution of such proceedings by a member of the company on behalf of the company
- appointing a receiver or a receiver and manager of the property of the company
- ordering a person to refrain from engaging in specified conduct
- ordering a person to do a specified act or thing
- modifying or repealing the constitution of the company
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Director & Shareholder Disputes – Frequently Asked Questions
What do shareholders disputes and directors disputes usually arise from?
A shareholders dispute or a directors dispute commonly arises from the following circumstances:
Breach of Duties:
Disputes can occur in instances where there are claims of breach of director or fiduciary duties by those directing the company.
Experiencing Oppression:
A prevalent catalyst for shareholder disputes is perceived oppression by fellow shareholders or directors. This typically occurs when a shareholder alleges they’ve been sidelined or adversely affected by the actions of others involved in the business.
Differing Viewpoints:
It is not uncommon for shareholders to possess divergent perspectives regarding the company’s trajectory or governance. When these differences surface, they may trigger conflicts and subsequent disputes.
Communication Breakdown:
Sometimes, the simple absence of clear communication can lead to misunderstandings and disputes. Shareholders may be left in the dark regarding board decisions or lack the necessary information to make knowledgeable choices.
At Marino Law, we firmly believe that securing immediate legal guidance is crucial, irrespective of the cause of the shareholder or director dispute.
Are there any conflicts of interest for shareholders?
While directors have fiduciary duties to avoid conflicts of interest, shareholders typically do not have the same obligations. Shareholders do not have control over the company via a directorship meaning they are generally free to act in their own interests, even if those interests conflict with those of the company or other shareholders.
Directors vs Shareholders:
Directors are responsible for managing the company and must act in the best interests of the company as a whole, avoiding conflicts of interest. Shareholders, on the other hand, are investors in the company and do not have the same management responsibilities or fiduciary duties.
Shareholder Actions:
Shareholders can vote on certain matters, such as the election of directors or major corporate changes, but they are not involved in the day-to-day management of the company. Their decisions are typically driven by their personal interests, such as maximising the return on their investment.
Minority Shareholder Protections:
In some cases, majority shareholders may take actions that negatively affect minority shareholders. While this can lead to disputes and allegations of unfair treatment, it is not generally framed as a conflict of interest in the same way as it is for directors.
Legal Framework:
The legal framework governing companies, such as the Corporations Act 2001 (Cth) in Australia, sets out the duties of directors but does not impose similar duties on shareholders. Shareholder agreements and company constitutions can include provisions to manage conflicts among shareholders, but these are contractual rather than fiduciary obligations.
Understanding the distinct roles and responsibilities of directors and shareholders is crucial for addressing disputes and ensuring good corporate governance. You can trust Marino Law to guide you through this complex territory with unerring expertise.
What happens when shareholders disagree?
When shareholders disagree, it can create significant challenges for the business and its operations. Failure to address these disagreements promptly can escalate into a crisis, potentially resulting in severe business losses.
It’s essential to seek early legal advice to prevent deadlock and mitigate the negative impacts of shareholder disputes. Legal guidance will ensure that parties understand their rights and obligations, assist in navigating complex legal issues and allow the exploration of dispute resolution methods.
Seeking expert legal advice from shareholder dispute lawyers ahead of any potential shareholder disputes is crucial to avoid escalation to commercial litigation or court proceedings.
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Need help in other areas of your business?
Marino Law has the expertise to assist you in all your business matters, including business disputes, commercial and business law and construction or building disputes.
Our Accredited Specialist in Commercial Litigation is highly sought after for his expertise and litigation skills.
