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NSW Legal options when company in loss

Discussion in 'Commercial Law Forum' started by Nick04019, 12 August 2017.

  1. Nick04019

    Nick04019 New Member

    12 August 2017
    Likes Received:
    I have started Production house (Entertainment industry) 5 months ago along with my friend as director.
    We have raised investment from close friends and family to 800K.
    contract terms:
    we gave contract to investors as each share at 2000$.
    We(company) will buy shares as agreed price(no price mentioned)
    investors understand the riskl involved.(not mentioned any detail level what will be the risk)
    End of contract terms.
    Next we invested money in one commercial program and program was not successful.
    company made 80 % loss.
    now the investors are sending legal notices to pay back their money.
    so far we have not issues any share holders certificates ,(not registered at ASX) we just game above contract, are we breaching the law for not issuing share certificates.( not even non market certificates)

    What options do we have (company)
    can any investors sue personally
    can the company declare insolvency ? or bankrupt ?
    what is the legal process to tell investors that company made loss and cant return money ?
    what if any investors claim negligence of director duties what will happen ?
    if we go legally will the court ask for all receipt of expenses and income ?
    since we raised money in very short period and made loss would there be any directors duties breach as with out any experience we raised money on personal goodwill and with in no time we made loss(2 months time every thing).
  2. Tripe

    Tripe Well-Known Member

    22 May 2017
    Likes Received:
    without any knowledge of the full wording of the contract,

    I understand that the company is not insolvent, but the initial share holders capital is now only worth 20% of initial investment.

    Are you a registered business via ASIC?

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