Company/shareholders, partnerships and joint ventures
Although at GSC we act for various institutions on property and corporate transactions, we love acting for entrepreneurs. We like dealing with the person who makes the decisions and can give the direct instructions.
Often these entrepreneurs enter into joint arrangements with third parties or already have associates. These arrangements can take many forms including a private company, a partnership or a joint venture. From time to time those relationships go wrong and the problems have to be addressed. It can feel like dealing with a divorce. It can be a very personal episode, full of recrimination.
The starting point when handling this sort of dispute is the documentation governing the relationship.
In the case of companies, the prime document will usually be the Shareholders’ Agreement but the position can also be directly influenced by legislation (the relevant Companies Act) and the Memorandum and Articles of Association. There can for example be pre-emption rights in the event that a shareholder wishing to sell his shares and a notice and valuation procedure to be gone through.
In the case of partnership there is usually a Partnership Agreement and of course there are Partnership statutes.
A joint venture is normally defined by way of a Joint Venture Agreement.
The documents may provide a formula for resolving disputes. For example, a private company will often find what is known as a ‘shotgun’ option whereby if one party wishes to end the relationship with the other he can serve notice indicating the price at which he is prepared to acquire the other shareholder’s shares but can only do so on the basis that the offer can be matched by the party receiving such notice.
Since the late 1970s the Courts have encouraged people to find ways beyond simply putting a company into liquidation or a partnership into dissolution. A minority shareholder, if he is being prejudiced by the way the affairs of the company is being conducted, can petition for relief against unfair prejudice and the Court can order his shares be acquired.
A company’s affairs may be being prejudiced by the conduct of one or more of the directors. It is the company who will normally bring a claim for relief but where there has been misconduct by directors, a shareholder may be able to bring a claim in his own name on behalf of the company. This is known as a derivative claim.
The options open to the shareholder or partner need to be explained carefully and a course of action selected. This all requires a hands-on approach with careful analysis of potential consequences. At GSC we have been advising on these situations for many years and are very conscious of the need to give our clients a service which deals with the emotional side as well as addressing legal technicalities and requirements.
Michael’s excellent legal knowledge, guidance and professionalism enabled a successful defence. He is a straight talker, getting to the heart of the issues quickly. Tactically astute with excellent negotiation skills. I would highly recommend Michael in any Commercial litigation.
Michael Shapiro is concise in his advice and adopts a pragmatic approach to challenges delivering realistic and enterprising solutions which produce results.
Michael is our first call whenever we need any legal advice. Straight talking, commercial astute, knowledgeable and honest, he has consistently produced results that result in better outcomes for my business. I am pleased to call him our lawyer and partner.
I have known Michael for 15 years, he is dynamic in his approach to the various problems we have put his way. He gets to the heart of the problem quickly and provides a very workable solution. His litigation skills are excellent and forceful with the other party. I very much like him on my side.
Michael Shapiro is an experienced litigator who has a very calm and collected approach to his job. He is never phased by the other side, and has an excellent manner with even the most difficult clients.
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