NSW Guarantor release due to other financial needs

[JJa]

Hi ,

I am a Director and Guarantor of a small company (a Pty Ltd) since few years. Now due to my financial needs and buying house I want to stop being a guarantor of the company. I have some shareholding on this company.
I have sent formal requests to the board and the bank and the bank has asked other guarantors and directors documents before it relieves me.
Questions:
1) Because time is critical due to applying for a home loan, What legal action(s) I could take if the remaining directors and guarantors are deliberately making delays in providing the documents? Is there legal steps I can take to force them to provide documents to the bank, apart from asking for a special general meeting?
2) Is there a provision for any compensation if the delay caused by the remaining directors and guarantors causes issues in approval of my home loan or if the date of settlement is reached and the loan is not issued due to the delay?
2) Should I also stop being a director of this company?
3) Is there a need for cross-indemnity agreement to be signed between me and the remaining directors and guarantors?


Thanks!
J

 

[Matthew Birch & Warner]

Hi J

The questions you asked are very specific to the shareholders agreement that is in place, failing that the corporations act. I will state the following:

1) You cannot take action against someone for access to their personal financial records, unless it is proven they owe a debt to you.
2) Compensation is usually reserved for times when somebody has suffered a loss.
2) Removing yourself and informing the other directors and board of that intention may revoke your guarantee.
3) It would be surprising if the other directors did not request you provide indemnity for the time prior to you withdrawing your guarantee. However, you should not release them from their joint and several guarantees for the same period.

J there are too many permutations to hazard any real advice without first considering your personal circumstances and reviewing company and shareholder documents.

My advice is to gather as much documentation as you can and see a commercial lawyer for specific advice. No internet lawyer will be able to conclusively answer the above questions without further information.

Regards
Matthew

 

[Rod]

Agree with the above comment.

And they do not have to release you from your guarantee if there is no provision for it in your agreement. You can resign as director, you can sell your shares and still be responsible as guarantor. The mortgagee and other guarantors may need to all agree to release you, and unless you can point to some clause in writing, they are unlikely to be obliged to release you.