Business Owner Dispute

Business owner disputes can arise in many ways. While financial pressure is one cause, disputes are also common even where businesses are performing well.

Consider this scenario: you are a director and shareholder of a company you have operated for many years with a co-director. Each of you manages different parts of the business, but one division is more profitable than the other. Over time, you begin to notice a lack of transparency in the business and decisions affecting day-to-day operations. You are not being consulted and are finding it difficult to access financial records. You are concerned your role is being undermined.

You have reached a point where you wish to exit the business. Despite your investment and contribution, your co-director offers to buy your interest at a value you consider too low.

Situations like this are common. Depending on the structure of the business, there are legal rights and remedies available where co-owners are in dispute.

The Corporations Act 2001 provides a range of remedies in corporate disputes, including disputes between shareholders.

These may include court orders for the compulsory acquisition of shares at fair value or, in more serious cases, the winding up of the company.

A winding up involves the appointment of a liquidator to manage the orderly closure of the company’s affairs, including the sale of assets and payment of creditors.

A number of factors must be considered when resolving a business ownership dispute, including:

• The company constitution and any shareholders’ agreement, or the partnership agreement where applicable;
• Employment arrangements;
• The financial position of the business;
• The conduct of directors, shareholders or partners;
• Potential liabilities to creditors and statutory obligations;
• The ability to continue trading following separation;
• Achieving an appropriate value for any sale of shares or interests;
• Remuneration and entitlements under any employment arrangements;
• Rights under sections 232, 233 and 461 of the Corporations Act 2001.

In addition to statutory remedies, there are also remedies at general law and in equity for parties seeking to end their business relationship and resolve outstanding issues.

We have extensive experience acting in partnership and ownership disputes involving companies, partnerships, trusts and joint ventures.

For all enquiries, please contact us on 0755 740111 or admin@qbmlaw.com.au.