What can I do?
A. There are a variety of options open to you depending on the circumstances of the transaction. Some of the key options are set out below.
The first issue is whether the sale is a "major transaction", as defined by section 129(2) of the Companies Act.
The definition includes the sale of assets which amount to more than half of the value of the company.
If the sale is a major transaction, the act requires that it should have been the subject of a special resolution of the company.
A special resolution must be approved by a majority of 75 per cent of the votes of the shareholders, unless a higher majority is specified in the company's constitution.
If the sale was a major transaction, but was not the subject of a special resolution, you may be entitled to apply for an injunction preventing the sale going ahead under section 164 of the act.
In these circumstances you may also be able to hold the directors personally liable for any losses that arise.
If there was a special resolution, which was duly passed by 75 per cent of the shareholders (or whatever higher majority the constitution specifies), but you cast all of your votes against the transaction, sections 110-112 of the act enable you to require the company to purchase your shares for a fair price.
This may provide an option if you no longer wish to own shares in the company.
Disregarding whether the sale was a major transaction, you may still have the ability to take action in relation to the sale.
The apparent interest of the company's directors in the purchaser may provide you with actionable rights.
Section 140 of the act provides that if a director is directly or indirectly materially interested in a transaction, the director must disclose this in the company's interests register.
A director who fails to do this commits an offence and is liable on conviction to a fine of up to $10,000.
A breach of this obligation may also be another basis to seek an injunction under section 164 of the act.
Even if the sale proceeds, a failure by the directors to disclose their interest may still provide a basis for attacking the transaction.
Under section 141 of the act, a transaction in which a director of the company is interested may be avoided by the company at any time within three months after the transaction is disclosed to the shareholders.
It is the company which must seek to avoid the transaction.
If you cannot persuade the company to take the action, you may wish to consider applying to take a derivative action in the company's name, although this is a fairly complicated legal process.
A further option may be provided by the prejudiced shareholder provisions in the act. These provisions bite if a shareholder has been treated in an unfairly prejudicial way.
Under these provisions, the court has wide powers, including to direct share purchases and/or the payment of compensation.
You may also be able to hold the directors personally liable if they have been reckless, or not taken proper care, in having the company agree to sell the property.
As you can see, there is a variety of options open to you.
The nature of the transaction, the company procedures which have been followed, and the true nature of the directors' interest in the transaction will all affect your rights.
There may well be steps you can take to prevent or overturn the sale or obtain other relief.
A lawyer can discuss with you the most cost-effective approach to addressing your concerns.
* Send us a commercial property question
