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James D. Ford
James D. Ford, Solicitor
Category: Australia Law
Satisfied Customers: 1601
Experience:  Consulting Principal at Nexus Law Group
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Maurice, my friend is a 50% owner/equity holder in a

Customer Question

hi there Maurice,
my friend is a 50% owner/equity holder in a business in Victoria and the other Director refuses to sign company cheques because he wants to be bought out of the business for an unreasonable amount. he has totally failed in his Director duties, theft, insulting staff, drug taking,drunk--it is a licensed premises.
first priority is access to the bank account to pay the rent, suppliers etc.
can you suggest a way to do this as a matter of urgency?
Submitted: 1 year ago.
Category: Australia Law
Expert:  James D. Ford replied 1 year ago.

The first question to ask is whether there is a Shareholders Agreement that provides for how the parties will work together, and what is to occur if there are disagreements, etc.

I assume not, but need to ask. Was a lawyer involved when this business was established?

Kind regards,


Customer: replied 1 year ago.
I don't believe there was a specific shareholder agreement--because they were best friends!! there was a solicitor involved as it needed to have a liquor license as well. Needless to say this lawyer can't act now due to conflict of interest.
The solicitor he has is dragging his feet, but did issue a detailed Deed or resign as a Director and included all the Companyy accounts. The other party has verbally advised that he does not accept the offer--even though he has totally failed in his duties as a director-refusing to sign company cheques=so funds in bank account cannot be accessed and Landlord wants a direct debit arranged from the account. other failures include failed to provide funding--verbally agreed it would be 50-50. Failed to assist in the business in any capacity for past 12 months, previously and recently entered premises drunk and on we believe on illegal drugs (marijuana) which he partakes or regularly. he has also verbally assault my friend (director) staff, and patrons.
how can we 1. get urgent access to the bank account as a priority 2. with limited costs ( we have written letters of his misdemeanors from patrons) have him removed as a director?
Expert:  James D. Ford replied 1 year ago.

OK, next question...

Does the company have a company constitution? or does it use the standard replaceable rules?

Customer: replied 1 year ago.
not sure I will find out and let you know
how do I get back to this website if I can't get an answer to you today?
Expert:  James D. Ford replied 1 year ago.

I assume it has no company constitution that alters the standard replaceable rules... otherwise the lawyer would have suggested this already...

I need to add at this stage, that the lawyer who set this all up.. may have some liability for professional negligence.. as there is no excuse not to set up everything correctly.. so at some point your friend needs to examine the paperwork from the Solicitor, and determine whether they were strongly advised to have a Shareholders Agreement!!

The problem is that pursuant to the replaceable rules - sepcifically s203C of the Corporations Act 2001 a director can be removed by an ordinary resolution of the company...

However, as your friend only has 50% of the votes, he will not be able to get an ordinary resolution passed without the vote of the other shareholder/director he is wanting to remove.

Expert:  James D. Ford replied 1 year ago.

Yes, we can continue tomorrow. Cheers, James

Customer: replied 1 year ago.
ok thanks
Expert:  James D. Ford replied 1 year ago.

Chat then.

Expert:  James D. Ford replied 1 year ago.

He can be automatically terminated as a director if he is convicted of a criminal offence... or if he goes bankrupt for the period of the Bankruptcy... or enters a Part X insolvency agreement whilst the conditions of the agreement remain unsatisfied..

How much $$ has he stolen? is there any evidence?

Did the verbal assault, in any way threaten to seriously injure, or kill anyone? and if it did, has it created a fear that it would be carried out?

Does he owe money personally?

Kind regards,


Expert:  James D. Ford replied 1 year ago.

Moving on to the director's blatant obstruction of normal company activity, and refusal to change, unless there is personal gain (blackmail..or extortion). This could be a criminal offence, if there is sufficient and clear evidence of the blackmail.. or extortion.



(1) A person is guilty of blackmail if, with a view to gain for himself or another or with intent to cause loss to another, he makes any unwarranted demand with menaces; and for this purpose a demand with menaces is unwarranted unless the person making it does so in the belief—

(a) that he has reasonable grounds for making the demand; and

(b) that the use of the menaces is proper means of reinforcing the demand.

(2) The nature of the act or omission demanded is immaterial, and it is also immaterial whether the menaces relate to action to be taken by the person making the demand.

S. 87(3) amended by Nos 9576 s. 11(1), 49/1991 s. 119(1)
(Sch. 2 item 41), 48/1997
s. 60(1)(Sch. 1 item 65).

(3) A person guilty of blackmail is guilty of an indictable offence and liable to level 4 imprisonment (15 years maximum).


Good faith--civil obligations

Good faith--directors and other officers

(1) A director or other officer of a corporation must exercise their powers and discharge their duties:

(a) in good faith in the best interests of the corporation; and

(b) for a proper purpose.

Note 1: This subsection is a civil penalty provision (see section 1317E).

Expert:  James D. Ford replied 1 year ago.


Use of position--civil obligations

Use of position--directors, other officers and employees

(1) A director, secretary, other officer or employee of a corporation must not improperly use their position to:

(a) gain an advantage for themselves or someone else; or

(b) cause detriment to the corporation.

Note: This subsection is a civil penalty provision (see section 1317E).

(2) A person who is involved in a contravention of subsection (1) contravenes this subsection.

Expert:  James D. Ford replied 1 year ago.


Good faith, use of position and use of information--criminal offences

Expert:  James D. Ford replied 1 year ago.


Court power of disqualification--contravention of civil penalty provision

(1) On application by ASIC, the Court may disqualify a person from managing corporations for a period that the Court considers appropriate if:

(a) a declaration is made under:

(i) section 1317E (civil penalty provision) that the person has contravened a corporation/scheme civil penalty provision; or

(ii) section 386- 1 (civil penalty provision) of the Corporations (Aboriginal and Torres Strait Islander) Act 2006 that the person has contravened a civil penalty provision (within the meaning of that Act); and

(b) the Court is satisfied that the disqualification is justified.

(2) In determining whether the disqualification is justified, the Court may have regard to:

(a) the person's conduct in relation to the management, business or property of any corporation; and

(b) any other matters that the Court considers appropriate.

Expert:  James D. Ford replied 1 year ago.

Please accept and rate my response, kind regards, James

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