Shareholder Agreement Termination Of Employment

What for? If the company succeeds, it may find itself in a situation where the majority owner (or an alliance of owners who jointly control the majority of the shares) finds that the actual value per share of the company far exceeds the price set in the shareholder contract for the purchase of the shares of a licensed employee. This situation creates the conditions for an aggressive majority shareholder to exercise administrative power and terminate the minority owner`s employment, thus forcing the minority owner to sell his shares at the price of the shareholders` pact, well below its real value, to the great financial benefit of the majority owner. In essence, the majority shareholder can use its power to control employment decisions as an instrument to appropriate the value of the minority owner`s shares through a forced purchase. The Tribunal found that, in this case, the shareholder contract granted Mr. Mikelstein contractual rights distinct from his general employment rights during the reasonable notice period, such as payment in lieu. B and place of termination and continuation of reasonable notice benefits. Because of the specificity of the shareholder contract as “take or leave” the form of the contract, which also requires a uniform interpretation for all shareholders, the court interpreted the termination of this agreement on their face, with the trigger date after the 30 days agreed after the dismissal of the employee. In such a scenario, the minority owner could take legal action and argue that the majority owner`s conduct is depressing, unfairly damaging and contrary to his reasonable expectations as an owner. But the majority owner who has anticipated a dispute may, in advance, create a record of plausible grounds to terminate the minority owner`s employment. If the agreement requires a buy-back at a specified price and the majority owner has documented a plausible commercial reason to terminate the minority owner`s employment, the minority owner may be trapped without any prospect of flight.

In the legal dispute over the ownership of the shares, the party, which can refer to the clear language of the shareholder agreement, has a huge advantage. The worker has taken legal action for improper dismissal. In issuing a partially summary judgment, the appeal judge awarded damages to the worker for improper dismissal, on the basis of 26 months` notice. There was no recourse to this finding. If the shareholders agree that if one of them stops working with the company as an employee, his shares are bought out by the company, the question always arises: “How much” is? If the company or other shareholders do not have the money to buy the shares at the right start, other shareholders can at any time decide that the good retiree can hold on to his shares. The employee was employed by the employer for 31 years, the last time as Director, Business Development.

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