How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask Brisbane-Lawyer Your Own Question
Brisbane-Lawyer
Brisbane-Lawyer, Solicitor - Admitted 2005
Category: Australia Law
Satisfied Customers: 14361
Experience:  I did my law degree at the University of Queensland
17651911
Type Your Australia Law Question Here...
Brisbane-Lawyer is online now
A new question is answered every 9 seconds

I have a newly formed PTY LTD business in which I am sole director. We

This answer was rated:

I have a newly formed PTY LTD business in which I am sole director.
We have a Unit Trust that sits under the company, there a 4 unit holders with 25% share. The 4 unit holders work day-to-day in the business but do not derive an income.
The company is in its infancy (less than 12 months old) and one of the unit holders wishes to leave the business. He is wanting his 25% (plus more) share purchased by the other unit holders, however he is the only shareholder that did not physically pay his 25% share up front.
The company is presently trading at a loss, the company is still 6-12 months from trading cashflow positive. The company does not have a shareholders agreement.
I would like to see one of two things happen;
1. He signs over his 25% - no money exchanged as he did not contribute initially. I'm not sure how I can best "word" this to have him commit his signature.
2. The PTY LTD company remains solvent as myself as Director, we dissolve the existing Unit Trust, we set up a new unit trust where the 3 remaining investors each receive 33.33% share. Is this possible?
Hope you can assist.
Was there a signed Unit Trust Deed?
Customer: replied 3 years ago.

Yes.

Okay, now in the Deed does it say how the Trust can be dissolved?
Customer: replied 3 years ago.

i'll just try and locate the deed and have a look. i'll get back to you shortly.

I should be here, and if not, will be within a few hours.
Customer: replied 3 years ago.

ok great. my accountant is just emailing me a copy now so should have for you very soon.

Okay.
Customer: replied 3 years ago.

hi Alex


Is there a way in which i can email you the Deed? I seem to be having troubles doing it through this website.


Cheers

Please email it to:
[email protected]

And ask them to forward it to Alex in the Australia law group. This can take up to 24 hours.
Customer: replied 3 years ago.

Hi Alex


i was advised yesterday via email that my information on the Unit Trust had been forwarded to you? just wondering if you had received it?


Cheers

Several pages individually scanned came through. It would have been much easier if it was all one document, and there are also sections of the UTD that are missing. Of the 11 pages sent through, there is nothing about how to terminate the trust early (although Termination Date is referred to several times). So that kind of leaves us back at square one.

 

But there might be another way to proceed here.

 

Of the four unit holders, they all presumably contributed 25%, plus someone also coughing up the additional 25% for this chap who now wants out. Is that correct?

 

Was it ever put in writing that this fellow who now wants out, that he would pay for his 25% share in the Trust?

 

 

Customer: replied 3 years ago.

The schedule in the rear of the unit trust shows the amount required for his 25% share and that 'he' is responsible for this 25% share, however his actual payment was never forthcoming. The only discussions held was that once the company was cashflow positive that his share of net profits would firstly contribute to his 25% share payment before he would be eligible to receive further net profit distributions. This was generally understood between all however this was never stated in writing.


Our bank account when set up clearly shows 3 deposit payments totaling 75%. His share was not expected at this time,but it was understood that things did have to 'even' out at a time when the company was cash flow positive. However he is now exiting at a time when the company is trading in negative territory, and seems to be taking the position that he wants to remain as a silent partner (25%). My preference is to see him sign over his 25% share back to the other 3 Unit Holders in lieu of having to immediately pay his $$ share.


 

The schedule in the rear of the unit trust shows the amount required for his 25% share and that 'he' is responsible for this 25% share, however his actual payment was never forthcoming.

</ br>

Good.

</ br>

Then the Trustee should commence proceedings against him in The Victoria Magistrates Court for whatever the amount was for the 25% as per the Trust Deed.

</ br>

Obviously you would need a lawyer to assist with this, but depending on where in Victoria you reside I may be able to recommend a good solicitor who could help. Just let me know if you're interested.

</ br>

If you're satisfied with the results of your question, then I'll ask you to please provide positive feedback so that I will get credit for the time spent on your question.

Customer: replied 3 years ago.

Thank-you Alex.


Before i commence legal proceedings would it be best to try and resolve the issue by asking him to sign over his 25% share due to his non payment? ( i suppose i'm referring to clause 27 of the deed). From what i can understand reading clause 27 is that we have the trustee and other unit holders have the right to exercise that option?).


Yes if you know a lawyer in Melbourne then that would be great.


Happy to provide the feedback so you can get credit, not a problem at all. How do i do this?


Cheers

Before i commence legal proceedings would it be best to try and resolve the issue by asking him to sign over his 25% share due to his non payment?

I thought you did that already and he flat out refused. Obviously if he agrees to this proposal it would solve a lot of problems.

And you could use clause 27.2 to cancel his units, but the problem is that all the unit holders would need to pay the advance, and you would be hoping that he defaults on the advance. If he doesn't, then 27.2 won't work.

Should you have any other questions, please let me know.

If you're satisfied with the results of your question, then I'll ask you to please provide positive feedback so that I will get credit for the time spent on your question. Your question can continue even after you leave positive feedback, so if you have any follow up questions please don't be afraid to ask.
Brisbane-Lawyer and other Australia Law Specialists are ready to help you
If you are in Melbourne I recommend you contact Neil Ogg who can be reached on 1300 782 451. He should be able to assist you with this.

As for leaving positive feedback, there should be a button you press to do this somewhere on the screen. And thank you for that.