Company & Business Disputes
Dispute Resolution & Litigation
Giving you expert advice to resolve business and company disputes.
In today’s rapidly evolving commercial landscape, driven by constant technological advancements, companies and businesses face increasing pressure to stay competitive. These changes often lead to internal disputes among company directors, shareholders and business owners. At Attwood Marshall Lawyers, we understand the complexities of this environment and have a team of dedicated litigation and dispute resolution lawyers who specialise in resolving business disputes.
Commercial disputes between directors and shareholders (or business partners) invariably arise during the course of business, often due to arguments over contributions or effort, differing opinions as to the management and direction of the business, or because of a lack of clarity around roles.
Disputes can be resolved quickly by getting all parties involved to communicate openly and honestly about their roles and contributions and by exploring their interests. Our experienced business dispute resolution lawyers can assist clients by generating options to resolve the dispute without having to resort to litigation. Resolving a commercial dispute in this manner will ultimately save you time and money and will give both sides more control over the outcome.
Disputes in business most commonly arise due to:
- A lack of clarity around roles: It is important that each director’s role is clearly defined to avoid blame games.
- Arguments over contributions or effort: Underperformance can be a sensitive point of contention between business partners, where one side may feel they have contributed more to the business than the other – shareholders inevitably overvalue their contribution (sweat equity).
- Different opinions as to management and the direction of the business: Differing opinions can have a significant impact on business partners being able to resolve matters and successfully move forward.
Often minority shareholders in a company are oppressed by majority shareholders and/or directors seeking to cheat them out of their fair share of company profits, or by shutting them out of corporate governance. Similarly, company directors often breach the fiduciary duties they owe shareholders under legislation and the common law. Our specialist team of commercial litigation lawyers regularly assist both minority shareholders in this way, but also majority shareholders and directors where spurious claims have been made against them.
When it comes to business disputes among directors, shareholders or partners, often common sense is left for dead. In the heat of a dispute, shareholders can find it difficult to focus on a commercially sensible outcome. This is where the assistance and guidance from experienced business dispute lawyers can be invaluable.
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Advantages of a well-crafted Shareholders Agreement
Predicting and preventing every potential dispute among business partners and shareholders is impossible. However, a meticulously drafted Shareholders Agreement typically includes a dispute resolution mechanism that incorporates options like a ‘buy-out’ or ‘sale’ option, with pre-defined procedures for valuing the business. Additionally, it outlines the initial financial contributions of all parties and addresses the handling of intellectual property of the business.
A Shareholders Agreement may also govern succession issues and provide for appropriate insurance so that if a business partner dies or becomes permanently disabled, there are funds to pay-out the departing partner’s share with the remaining partners able to continue the business.
Although certain businesses have different issues and may need specific clauses dealing with business matters exclusive to that area, having an agreement can save a lot of time, emotional energy, money and legal costs. Our dedicated litigation lawyers can assist and help your business resolve internal disputes promptly.
There are many reasons a shareholder might require company information. Often it is because there are suspicions that the company is financially unstable or conduct is being exhibited which is oppressive to shareholders. The Corporations Act 2001 provides various mechanisms for minority shareholders to obtain relevant information from a company.
A shareholder is entitled to a copy of the company’s constitution within 7 days of submitting a request in writing. Under certain circumstances, a shareholder in a proprietary company is entitled to a financial report and/or a report from the directors. In certain circumstances and as a last resort, an aggrieved shareholder can apply to the court to obtain the company’s books.
If you are having difficulty getting the information you need, it is important to discuss your matter with an experienced commercial litigation lawyer who can help guide you through the initial steps to take to resolve your business dispute.
The best way to recover money from a company is by issuing a Creditor’s Statutory Demand which is a formal demand by a creditor to a company under Section 459E of the Corporations Act 2001 (Cth). A Creditor’s Statutory Demand is suitable for debts over $2,000, which is not in dispute and are due and payable.
If a company owes you money, and the debt is not disputed, a Creditor’s Statutory Demand can be a useful and effective tool when used correctly. It forces a company to pay the debt within a 21 day period, otherwise, the company will be deemed to be insolvent and can be wound up (put into liquidation).
Generally, no. Directors are protected under ‘the corporate veil’. This is because a company is its own distinct corporate legal entity which is capable of suing and being sued. Therefore, joining directors to most lawsuits is not permitted and, generally, a director will be protected from court proceedings.
Many clients seek our advice about director’s duties, deceptive conduct, and corporate governance. We regularly see issues arising from director disagreements to more serious issues such as directors breaching their fiduciary and statutory duties imposed on them by the Corporations Act 2001 or under the common law or the company’s constitution. An investigation and appropriate legal advice may lead to the sacking of a director for serious misconduct.
In addition to the requirement to ensure compliance with general and specific laws applying to a company’s operations, a director’s duty is to its shareholders. If shareholders are being unfairly treated or oppressed, there are avenues available for shareholders to seek redress under the Corporations Act 2001. However, if a company is insolvent, or if there is a risk of insolvency, a director’s duties extend to include creditors (including employees with outstanding entitlements).
When seeking dispute resolution strategies for shareholder disputes, director disputes, partnership disputes, addressing the issue at an early stage is essential. This can reduce interference to business operations, and ultimately allow all parties to move on with their lives. Early intervention can also reduce the cost, delay and stress associated with resolving disputes via litigation. Getting appropriate advice from an experienced business dispute lawyer can assist parties to engage in open and honest discussions which is critical to resolving all matters.
Our law firm has a dedicated team of commercial litigation lawyers who have extensive experience in resolving disputes. We can offer legal advice on breaches of shareholders’ agreements, explaining party’s obligations, employment disputes, partnership disputes, contract disputes, intellectual property disputes, and assisting with deadlocks, buyouts and separations.