Financial Advice for a Company Shareholder

LLitew8baby on 03/11/2017 - 10:19
Last edited 03/11/2017 - 13:18

Hi all,
First post here so forgive me if I make any rookie mistakes. I'm not exactly sure if this is the place to put this, but anyhow I'm open to feedback and any constructive comments.

Long story short - I have shares in a proprietary limited company here in Australia that I invested into a few years back. I know they have increased in value but I am not exactly sure of the specific figure. I believe the increase is fairly substantial, however I feel the company director/other shareholders are withholding details so that I believe otherwise (I think they are entitled to buy my portion of shares first if I decide to sell).

If I sell, I want to do this properly in order to get the best deal I can. My knowledge of the laws and rights around being a shareholder is very limited - this was a bit of a fluke to be honest as I know many business investments can flop. Anyway I thought I would put this past the ozb community in case there were 'people in the know' floating around.

I am also looking for a specialist financial advisor/business lawyer etc. that I can work with in case a negotiation around selling shares takes place. In saying that, if anyone is, or knows of someone that is good in this area, please let me know.

A couple of questions I have for anyone who is able to answer:

  1. As a shareholder, am I lawfully entitled to see financial reports (i.e. financial statements - profit and loss, financial position etc.) for the company? Do I need to sign anything to release that info or am I entitled to see it anytime?
  2. Who is the best person/people/company to approach in regards to seeking reliable advice/guidance on this issue? (i.e. I want to speak to someone with a good reputation who is going to get me the best deal without charging me through the roof fees - if that's at all possible).

Any advice would be much appreciated Thanks in advance!

Financial

Comments

  • txchou on 03/11/2017 - 11:25
    +4

    If the company is a 'small proprietary company' and you own 5% or more of the voting rights then you can give the company a signed direction to prepare financial reports for a specific financial year and provide all shareholders with that report.

    http://www.austlii.edu.au/cgi-bin/viewdoc/au/legis/cth/conso…

  • txchou on 03/11/2017 - 11:28
    +3

    The term 'small proprietary company' is defined in section 45A of the Corps Act.

    http://www.austlii.edu.au/cgi-bin/viewdoc/au/legis/cth/conso…

  • afoveht on 03/11/2017 - 11:39
    +3

    If you have a shareholders agreement then check that first.

    • Litew8baby on 03/11/2017 - 15:41

      Absolutely, will be digging it up when I get home

  • txchou on 03/11/2017 - 11:52
    +1

    Your shareholder rights will be outlined in the company's constitution.

  • txchou on 03/11/2017 - 11:55

    Re q2 if you can't get any personal recommendations then contact your state law society

  • txchou on 03/11/2017 - 11:57
    +3

    Since you have suspicions that the management and other shareholders are trying to pull a fast one on you, it's advisable to get some advice before dealing with the company.

    • Litew8baby on 03/11/2017 - 15:26

      Definitely - thanks for the links!

  • loke on 03/11/2017 - 13:37
    +1

    Sounds like a whole can of worms OP, good luck, definitely see a lawyer

    I feel the company director/other shareholders are withholding details

    Even with the FRs not so sure how much you can trust it, you'd need their bookkeeping files & source documents, maybe involve their accountant? and an auditor? especially if a lot of cash transactions are involved (cash economy/cash records)

    • Litew8baby on 03/11/2017 - 15:36

      Thanks mate - yeah I might have to. I've requested FR's and have been asked to sign a confidentiality document prepared by company accountant before info is released. Not sure if this is common practice, but I do also wonder if there is some shady stuff going on behind closed doors that even the account is in on. I get the feeling they don't want me seeking legal counsel but I can't work out if this is in the deed or not (too much technical jargon lol). Will definitely have a lawyer or someone read over it for me before signing anything though

  • HighAndDry on 03/11/2017 - 13:49

    If your shares are worth anything over 3 figures, go see a lawyer. A first consult should cost a few hundred at most, and at least point you in the right direction.

    • txchou on 03/11/2017 - 14:23
      +3

      I'd say 5 figures - especially if considering commenting court proceedings

    • Litew8baby on 03/11/2017 - 15:19
      +2

      Thanks guys - potential for 6 figures I believe so will most definitely be seeking legal counsel.

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