Company law of Australia regulates shareholder disputes and various methods of dispute resolution. In case a business entity is owned by two or more shareholders, is managed by two directors and there is no shareholders agreement, the business entity will not be immune from a variety of disputes that may occur there and create deadlock between the members. There are several dispute resolution strategies that help Australian companies survive. Present-day shareholder agreements tend to handle situations when it is necessary to share sales proceed. Also, modern shareholder agreements may regulate how “bad leavers” – shareholders and employees who have resigned or been terminated with cause – be compelled to sell their shares back to the company. However, if there is no shareholder agreement, there may be much more difficult to settle shareholder disputes under Australian law. In this connection, the disputing parties frequently have recourse to the company constitution, according to which deadlocks can be resolved by way of a casting vote of the chairman. In case a shareholder shows intent to get rid of this shares, he has to propose them to other shareholders, in accordance with the company constitution, or, if the company does not have any constitution, in conformity with the replaceable rules in the Corporations Act that empower the company in cases when, for some reason, the company does not have constitution.
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