Disputes between officeholders and/or members of small proprietary companies
This is Information Sheet 162 (INFO 162).
What are disputes about the running of companies?
Disputes that arise in small proprietary companies are often about the running of the company. They may be disagreements between individuals over the ownership, management or control of the company.
These types of disputes commonly arise in small proprietary companies. These companies usually have relatively few shareholders. The disputes generally relate to the private rights or interests of individuals, such as shareholders and business partners.
The company constitution is the most important document for a company and contains the rules that govern its operation. Under the Corporations Act 2001 (Corporations Act), the constitution acts as a contract between the company, its directors and its members.
This means that those involved in the company can go to court to seek compliance with the terms of the company’s constitution. There are other remedies as well, so we strongly advise you to seek legal advice.
What you should do
These types of disputes are best resolved with the benefit of legal advice and communication between the parties.
Seek legal advice
We recommend you seek legal advice to discuss the matter or resolve it through mediation.
If you are unsure about how to access legal advice, contact the Law Society in your state or territory.
Get more information
Check what company officeholders are obliged to do under the law and what members’ rights are.
ASIC and disputes about the running of companies
Disputes between officeholders and/or members of small proprietary companies generally relate to the legal rights of those involved under the constitution of the company. As such, they do not affect consumers or investors in the broader community.
For this reason, our role in helping you resolve this kind of dispute is limited to recommending you seek legal advice. That legal advice will help clarify the legal issues involved in your problem and might include options such as mediation, instituting private court action, or accessing some of the remedies available to members under the Corporations Act, again through court action.
We do not give legal advice.
While we can take action where there has been a breach of the Corporations Act, we exercise our discretion in deciding whether to investigate a report of a potential breach.
Generally, we do not act for individuals and will only take action where it will result in a greater impact in the market and benefit the general public more broadly.
Where can I get more information?
- For information about ASIC's role and the laws we administer.
- For more information on the laws that apply to Australian companies see ASIC's regulatory index - Australian companies. The road map is a subject matter index that will help you find ASIC regulatory documents and class orders relating to Australian companies.
Information sheets provide concise guidance on a specific process or compliance issue or an overview of detailed guidance.
This information sheet was issued in July 2013.
