incapacity

Why you should have a Shareholders Agreement

CONSIDER THESE COMMON ISSUES

What would happen to your company if you or your business partner became so ill that one of you could no longer work – or worse still, died?

Would you still be paying dividends or making distributions of profit to that person even through he or she is not around, or to their spouse or family?

If they died and left their spouse everything in their Will (including their shares in your company), would you want to be in business with his or her spouse?

What if your business partner sold his or her shares in your company to a complete stranger or a competitor following an argument?

How are your shares to be valued and over what period will the purchase payments be made to your family? Or is there an insurance policy to fund the payment in a lump sum?

HOW CAN A SHAREHOLDERS AGREEMENT HELP?

A Shareholders Agreement can cover these not uncommon scenarios and tailor the rights and obligations of the shareholders of a company to fit your personal circumstances and your particular business to help avoid some of these potential problems for everyone’s ultimate benefit.

You may have a Will, but you may not have certainty in relation to what will happen to your family or your business in the event of your death or serious illness unless these matters are clearly dealt with in a Shareholders Agreement.

FURTHER INFORMATION

For further information in relation to business succession, estate planning, litigation and dispute resolution or any commercial law matter, contact McKillop Legal on (02) 9521 2455 or email help@mckilloplegal.com.au

This information is general only and is not a substitute for proper legal advice. Please contact McKillop Legal to discuss your commercial law needs.

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in Business / Commercial Law / Dispute Resolution / General / Risk management  by 10 Feb 2025 0 comments

Company power of attorney

What would happen to your company if its sole director became incapacitated or died? How would bills and staff get paid? Who would make decisions on behalf of the business?

Companies may only act through its directors so in the case of a sole director company, the company will be unable to operate if something happened to its director.

A personal power of attorney granted by a director is not valid where it seeks to allow someone to act in the role of a director of a company as the position of a director is a personal duty that cannot be delegated. Only the shareholders of a sole director company can appoint a replacement, even if it is only temporary.

A personal held by a shareholder may be able to call a meeting of shareholders so as to seek to appoint a replacement director, but this all takes time.

Each company that has a single director should appoint its own attorney as part of its overall risk management strategy.

The Corporations Act grants to a company all the powers and authority of a ‘natural person’ and as such, a company can appoint an attorney under a company power of attorney to act on its behalf when the company itself is not able to act (such as through the incapacity or ill heath of its sole director) and this attorney can continue to act even if the sole director died.

FURTHER INFORMATION

Craig Pryor is principal solicitor at McKillop Legal. For further information in relation to corporations, commercial law or business related matters, contact Craig Pryor on (02) 9521 2455 or email craig@mckilloplegal.com.au.

This information is general only and is not a substitute for proper legal advice. Please contact McKillop Legal to discuss your legal concerns or objectives.

Stay up to date – LinkedIn | Facebook | Twitter

in Business / Commercial Law / General / Risk management  by 01 Feb 2019 0 comments