Shareholder Dispute

Background

An elderly couple had founded a small manufacturing company in the early 1990s. By 2007, they were ailing and needed to retire. An offer from an outside purchaser failed to complete and so the business was taken on by their son. There was no purchase and sale agreement and the 'A' voting shares were transferred on the basis of a letter which agreed that a class of 'B' non-voting shares would be created for Mum and Dad with the stated intention that dividends would be paid equivalent to the agreed sale value when the company could afford it.

Eight years later, still no dividend had been paid. The parents commenced Proceedings.

Inevitably, the case involved the recent history of the wider family and revealed the breakdown of relationships between the son and his siblings. The parents believed they had handed over a thriving business and the son that he had come to the rescue at the expense of his own business activities.

Outcome

A commercial settlement was reached by which the son agreed certain payments to his parents over a period of two years. Had the case gone to a full hearing before the Court, one or other of the parties would probably have faced financial ruin.

Sadly, the son and his parents were unable to meet during the day due to the high level of emotion. It can only be hoped that, having resolved their differences, their relationship might eventually be restored.