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Leon
Leon, Solicitor
Category: Australia Law
Satisfied Customers: 43698
Experience:  BEc Dip Ed, Dip Law (SAB) MTax (UNSW)
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I have a question regarding a small business. South

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Hi there. I have a question regarding a small business.
JA: What state are you in? It matters because laws vary by location.
Customer: South Australia
JA: Has anything been filed or reported?
Customer: No not at the moment.
JA: Anything else you want the lawyer to know before I connect you?
Customer: Yes. It is an established business, two directors, PAYG with 50/50 share split. It was set up 7 years ago with no exit plan (oversight now I can see that)...
JA: OK. To minimize me, please click the down arrow at the top right corner of this box.
Customer: OK... what happens next?

My name is ***** ***** I am a NSW Solicitor. I will do my best to assist you with your question.

What do you wish to do?

Customer: replied 3 months ago.
As stated the company is a PTY company with 2 directors (PAYG) and basically the only employees. There is a 50/50 split of ordinary shares. The registered company name is***** and it has been trading as TS4 Architecture and TS4 Living. My business partner wants to leave the business after 7 years and take 50% of the contracts with him as well as key leads that will generate on going income that "we" have been working on for some time. He also wants to basically close the company and has registered TS4 Living under his own name, something I think is disputable as TS4 has been trading under that name for >3 years. Do I have a case to say "no problem, exit but the company continues or can he force my hand? Thanks Paul

Good Afternoon

You do not have to allow this and as directors of the company the corporations act does not permit either of you to do anything that is to the detriment of the company.

Having said this if he does not want to work anymore all you can do is offer to buy him out of his share and there will have to be an agreement that he will not compete with you and not contact customers of the company.

If he refuses then you are in a stalemate and will have to have a court order as to what will happen.

Alternatively he keep it buy you out.

Because you do not have a shareholders agreement on what happens if you cannot reach an agreement the court will have to decide.

Here is a link sexting out the duties of directors to the company and other members

http://www.companydirectors.com.au/membership/the-informed-director/what-are-the-general-duties-of-directors

I am sorry I cannot give you a simple answer but the options you have are as stated but you both have to honour your duties under the law.

I hope this makes sense and is of assistance. if there is nothing further

Thank you for using my services.

If I have missed anything, or you have any further questions please let me know

If there is anything else in the future please do not hesitate to ask.

Please do not forget to leave positive feedback.

Regards

Leon

Customer: replied 3 months ago.
Hi Leon, I appriciate that company is rather complicated, but thanks for the pointers and confirming what I thought. Regards, Paul

Good Afternoon

All the best and good luck.

Leon and other Australia Law Specialists are ready to help you