LawAnswers.com.au - Australia's #1 Legal Community

LawAnswers.com.au is a community of 10,000+ Australians, just like you, helping each other.
Ask a question, respond to a question and better understand the law today!
Join us, it only takes a minute:

Unreasonable Shareholder Disputes

Discussion in 'Commercial Law Forum' started by StartUpBiz, 10 July 2014.

  1. StartUpBiz

    StartUpBiz Member

    Joined:
    10 July 2014
    Messages:
    2
    Likes Received:
    0
    We started an online business where we gave somebody 10% free shares in exchange for marketing services. For the first 6 months of his involvement it was a struggle to get him to do any marketing whatsoever. He offered his student son to provide some technical services for roughly 2 days per week. We warned him before starting his son's services that we do not have money to pay for his services and if he needed payment then we will not be able to provide. He stated that we should not worry he's got to pay his son anyway and he will remunerate his son as part of the deal. Unfortunately we had no written agreements to that effect.

    After about 6 months, when pressured to do marketing he went into a rage and walked out of the business. The next we heard of him was an exorbitant invoice for his and his son's time, travelling and toll fees over the 6 month period. We rejected the invoice and tried to reason to no avail. All he was interested in was payment and threatening us with bodily and property harm.

    We paid a lawyer for commercial litigation to write him a letter to stop the threats and to come forward and state his case, which he simply ignored. Subsequently, not being able to close the business he was a shareholder to and not knowing what to do we started another business providing the same services(with clients he had no part to); which he is now targeting our clients on Facebook with posts saying that we are "dodgy" operators and trading an illegal company. Does anybody have some advice as to what we can do about it under commercial law?

    We are a new business struggling to keep head above water -never mind having to cope with expensive lawyer fees (which he ignores!) and false accusations and defamation potentially causing damage to our new and potential clients.

    Did anybody else have this ridiculous experience and what can we possibly do?
     
  2. Rod

    Rod Well-Known Member

    Joined:
    27 May 2014
    Messages:
    2,170
    Likes Received:
    257
    Can't stop unreasonable people being unreasonable :(

    Make sure you document everything and let him initiate legal action before you waste any more money on him.

    Now only correspond with him/son in writing. Look at closing down the old business, or maybe get legal advice on the forced buying his shares. FYI majority shareholder can force a buyout of minority shares but I don't know how this is done.
     
  3. StartUpBiz

    StartUpBiz Member

    Joined:
    10 July 2014
    Messages:
    2
    Likes Received:
    0
    Thanks totally agree!
    If anyone knows how to legally force a buyout of minority shares I would be very grateful...
     
  4. Rod

    Rod Well-Known Member

    Joined:
    27 May 2014
    Messages:
    2,170
    Likes Received:
    257
    You can ask ASIC about the rules regarding the forced buying of minority shareholdings.
     
  5. Shan

    Shan Active Member

    Joined:
    11 July 2014
    Messages:
    6
    Likes Received:
    0
    I think it is in the legislation. But I think one last investment in a lawyer is the smartest thing to do with regards to that kind of action. I am sure it can go horribly wrong.
     

Share This Page

Loading...