Shareholders Disputes

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.

In conclusion, shareholders disputes can have significant legal consequences for all parties involved. It is essential that shareholders understand their rights and obligations under the shareholders agreement and seek legal advice if a dispute arises. If you are involved in a shareholders dispute, it is recommended that you seek legal advice.

 

About the Author

Catherine Ballantyne

Principal
Businesses rely on Catherine as a disputes specialist who will guide them through complex litigation, and who understands the commercial realities of being involved in a dispute.

Latest Knowledge

I am being cut out of the business by my business partner

At Madgwicks Lawyers we regularly assist minority shareholders who feel they are being unfairly excluded from their own business. A common concern is 'my business partner is cutting me out of the business’. This kind of behaviour may give rise...
9 July, 2025

ATO’s garnishee notices issued to purchasers prejudicing the rights of mortgagees

The recent decision of Parker J of the NSW Supreme Court in FCT v Waitara Linx Pty Ltd [2025] NSWSC 581 (Waitara), serves as a timely reminder of the risks mortgagees may face when a garnishee notice is issued to...
25 June, 2025

The importance of estate planning

In a world of increasing complexity, estate planning has become not merely prudent but essential. For individuals (and entities that they control) with significant assets, business interests or dependents, a properly structured estate plan is the cornerstone of long-term security,...
4 June, 2025