VIC Company Directors - Selling Business Without Shareholder Approval?

[kelly865]

A year ago, my husband and I sold shares in a successful retail company we had started ten years ago. The sale was arranged by our former accountant through another client of his. The arrangement was that the new shareholder would buy an initial 60% of the business and stock, and buy a further 10% of shares each year for the next four years, should we choose to sell them.

A comprehensive shareholder agreement was drawn up. The new shareholder appointed the aforementioned accountant as the Director, under whose management the business ran into debt over the course of 2016. We have since found out that the Director loaned $320 of his own money to the business as an unsecured loan. There are also about $300k of creditor debts.

In January, the Director advised us that the business was going to be put into receivership, but he has since told several people, including our company's accountant, that he has sold the company to one of his own entities and he will now be putting it into receivership and the creditors will not be paid. He has sacked most of the employees and put a family member in charge of the business.

They are publicly telling customers that the business is planning to open a new store, and they are placing orders with suppliers. How can this have happened? What can we do?

We have a meeting scheduled with our legal adviser but I would appreciate any help or suggestions from this forum.

Thank you.

 

[Rod]

Check the legality of the sale against the shareholder agreement.

If you and your husband remained directors, I suspect he may have exceeded his authority to sell the shares.

Ask your legal advisor if the sale was against the corporations act. Disadvantaging smaller shareholders to the sole benefit of the majority shareholder is illegal.