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Selling/transferring shares to someone else? Legal question

Discussion in 'Legal Issues' started by Truly Exotic, 20th Jul, 2016.

  1. Truly Exotic

    Truly Exotic Well-Known Member

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    Ok a big question for the legal guns.

    A lifetime ago i signed a lease with a medium sized shopping centre.
    I received a bit of financial help from the centre.
    I was only in the lease for about a year and decided to sell my business for personal reasons. And reassign the lease.

    Now. There was a clause in there that said "if i abandon the premises, the financial help would have to be paid back pro rata of the lease"

    After spending thousands of dollars through a lawyer fighting this. I ended up winning, as it wasnt loose change. I cant remebwr the exact terminology but my lawyer said it was poorly worded.

    My lawyer suggested that term "abandon" meant i was going to leave it empty. So in my case i wasnt abandoning the lease. Merely reassigning it. And this was our main defence.

    However . (Is this a stroke of genious??) My suggestion was that I was the sole director of the company that signed the lease and i held all the shares worth $12. I suggested to my lawyer that if the above first argument doesnt work or isnt strong enough. I could simply give all my shares to the new owner (we had a buyer already sign the contract at this point) and he would become the new sole director so no clauses would be triggered as the same company is tied to the lease.

    Would transferring the shares had worked???

    Just remimiscing the good old days!
     
    EN710 and willair like this.
  2. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    When you say 'you' had the lease do you mean a 'company' entered the contract with the landlord? If so then you are not a party to the contract, but most contracts would have contained a personal guarantee.

    You also have to consider the stamp duty implications - transferring shares is or was a dutiable transaction in some states - this could have been the state where the company was located and the state where the property was located.

    Also factor in that strangers generally don't like buying a company because they don't know the history of it and don't to inherit any current or future liabilities - tax debts, litigation etc. The new director could be personally liable for unpaid superannuation payments to yourself for example.
     
  3. Truly Exotic

    Truly Exotic Well-Known Member

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    Location:
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    Thanks terry.
    Yes the a company entered a contract. We were at a stage where the sale of the business was in the latter stages and then this spanner was thrown in the works. And both the buyer and seller wanted it to proceed.

    I did sign a personal guarantee. So does that mean that even if i gave/sold all the shares i would still have been liable after?
    I assume there was no stamp duty due to the company being worth $12
     
  4. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Yes the personal guarantee would have continued until it was released.

    Stamp duty would have been $50 if NSW, but leases are valuation so the company was probably worth much more.