If you own a business with other shareholders, where multiple parties are involved, it is best to be prepared for a situation where one or more shareholders want to leave the business. This is a 3 part series on what to consider when a shareholder leaves. Article 2 will discuss the sale of shares agreement. Article 3 will consider protecting confidential information, intellectual property and imposing a non-compete clause.

Will the company cease to operate?

For proprietary (private) companies, business members are shareholders. As a company is a separate legal entity, if a shareholder wants to leave the business, the company can still continue operations, as long as the company has at least one shareholder and one Australian director.

What are the administrative and company secretarial requirements when a shareholder wants to leave?

There are certain administrative requirements involved if a shareholder would like to leave. These include:

  • The company must approve the sale in accordance with the relevant document. This may be a Shareholders Agreement if the company has one, or a Constitution if the company has one, or the Corporations Act replaceable rules;
  • The shareholder must sell their shares in accordance with the relevant document. This may include offering their shares to all other shareholders, pro-rata in accordance with their shareholdings;
  • If the existing shareholders do not wish to purchase the shares, the shareholder may be able to sell to a third party. This may require approval of the company or the other shareholders;
  • The company must update the company share register;
  • The company must cancel the previous share certificate; and
  • The company must notify the Australian Securities and Investment Commission (ASIC) of any changes to the shareholder composition of the company.

Conclusion

At LegalVision we have specialist commercial lawyers who can assist you to draft a sale and purchase of shares agreement to negotiate the terms to protect your business, and to look after the administrative and company secretarial requirements to comply with the law.

LegalVision has high-quality experienced business lawyers. Please call our office on 1300 544 755. We will happily provide you with a fixed-fee quote and an obligation-free consultation.

COVID-19 Business Survey
LegalVision is conducting a survey on the impact of COVID-19 for businesses across Australia. The survey takes 2 minutes to complete and all responses are anonymous. We would appreciate your input. Take the survey now.

About LegalVision: LegalVision is a tech-driven, full-service commercial law firm that uses technology to deliver a faster, better quality and more cost-effective client experience.

The majority of our clients are LVConnect members. By becoming a member, you can stay ahead of legal issues while staying on top of costs. For just $199 per month, membership unlocks unlimited lawyer consultations, faster turnaround times, free legal templates and members-only discounts.

Learn more about LVConnect

Ursula Hogben
Need Legal Help? Get a Free Fixed-Fee Quote

If you would like to receive a free fixed-fee quote or get in touch with our team, fill out the form below.

  • By submitting this form, you agree to receive emails from LegalVision and can unsubscribe at any time. See our full Privacy Policy.
  • This field is for validation purposes and should be left unchanged.
Our Awards
  • 2019 Top 25 Startups - LinkedIn 2019 Top 25 Startups - LinkedIn
  • 2019 NewLaw Firm of the Year - Australian Law Awards 2019 NewLaw Firm of the Year - Australian Law Awards
  • 2020 Fastest Growing Law Firm - Financial Times APAC 500 2020 Fastest Growing Law Firm - Financial Times APAC 500
  • 2020 AFR Fast 100 List - Australian Financial Review 2020 AFR Fast 100 List - Australian Financial Review
  • 2020 Law Firm of the Year Finalist - Australasian Law Awards 2020 Law Firm of the Year Finalist - Australasian Law Awards
  • Most Innovative Law Firm - 2019 Australasian Lawyer 2019 Most Innovative Firm - Australasian Lawyer
Privacy Policy Snapshot

We collect and store information about you. Let us explain why we do this.

What information do you collect?

We collect a range of data about you, including your contact details, legal issues and data on how you use our website.

How do you collect information?

We collect information over the phone, by email and through our website.

What do you do with this information?

We store and use your information to deliver you better legal services. This mostly involves communicating with you, marketing to you and occasionally sharing your information with our partners.

How do I contact you?

You can always see what data you’ve stored with us.

Questions, comments or complaints? Reach out on 1300 544 755 or email us at info@legalvision.com.au

View Privacy Policy