Successful company with storm clouds on the horizon

Posted on May 19th, 2017

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Company planning is imperative. I recently saw a client of mine who was a director and shareholder in a very successful Hunter Valley company. Let’s call them Company Y. 

Many years ago, my client set up Company Y with his good friend and business partner. They were/are both directors and shareholders in Company Y. When Company Y was established a generic Company Constitution was produced on registration. The Company Constitution was not appropriate for the purposes of Company Y.


Company Y did not have Shareholders Agreement prepared to set out the rights and obligations of the shareholders together with the operation of Company Y. After all, “Why would Company Y need this? We are mates!”

Many years later, tragically, my client was diagnosed with a devastating illness and the future of Company Y was thrown into turmoil. The business partners and shareholders now have differing views as to how to proceed and there is no appropriate documentation setting out the rights and obligations of the parties.

Company Y is suspended in a state of unease and uncertainty. In times where my client should be living life to the fullest, they are now faced with having to deal with the affairs of Company Y in order to provide for their family when they are no longer here.

This heartbreaking situation could have been avoided if a little company planning was considered at the outset.

A wise person once said this to me when discussing Shareholders Agreements:

“When at peace, plan for war.”

This has stuck with me and, I think, illustrates the importance of having a Shareholder Agreement for every company as soon as possible. You never know what is on the horizon.


Lachlan Page, Solicitor at Mullane & Lindsay Solicitors, NewcastleLachlan Page is a Solicitor at Mullane & Lindsay Solicitors and practices extensively in commercial, business and property transactions and adviceIf you require any assistance in this area please contact Lachlan Page to arrange a consultation or contact our Newcastle office.

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