Joined: 08/October/2009
Location: Australia
Posts: 1
QuoteReplyTopic: Company rights against shareholders Posted: 29/October/2009 at 15:25
Hi, Can anyone help with this?
A family trading company has been in operation for approx 2 years, there are 3 directors and six shareholders, the directors are the husbands and the shareholders are the husbands and wives, each holding 1 ordinary share of $1. The members are all related, the directors being a father and his 2 sons.
One family group consisting of a son and his wife have decided to leave the company and start their own company, effective 30 June 2009. As at 30 June the comapany's net assets were in the negative approx $30k, or $10k per family.
The leaving family is citing limited liability and not acknowledging their $10k share of the company debts.
Aside from a moral obligation the outgoing family members might have, does the company or remaining shareholders have any legal recourse to recover any funds from the outgoing family members?
I doubt it, but I am no expert on company matters. However it will depend on any guarantees that were taken. Any liability in such a company is limited to the value of the shares held, that is the reason financial organisations insist on personal guarantees against loans to such companies.
If the company is in debt, does it have assets to cover that debt, if not, to continue trading places it in contravention of the companies act, and then all directors become liable for the debts, despite the limited liability.
I'm sure someone more versed in company law will come along ad explain this better or put me right if any of my explanation is incorrect.
I am NOT a lawyer. Anything said is NOT legal advice.
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