Disputes between shareholders occur for many issues, from simple day-to-day business matters to complicated issues of corporate governance. A recent case demonstrates that a dispute can often escalate to litigation if simple rules of decision-making are not followed.
In Carolia Pty Ltd v Crompton, four director/shareholders established a joint venture business in accordance with a part written/part oral agreement. Over the course of the problematic joint venture, meetings were held and resolutions passed without the required notice, inadequate agenda, and in the absence of the agreed quorum. In response, the plaintiff/shareholders claimed that the agreement had been repudiated and sought damages. The court found that the breaches had serious repercussions which resulted in the loss of the value of the plaintiff’s shares and this amounted to repudiation. The plaintiffs were awarded damages for the proven value of their shares. [...]
