Commentary

116 Termination of the shareholders’ agreement for breach etc

BUSINESSES vol 4(2) start-up, sale and purchase
| Commentary

116 Termination of the shareholders’ agreement for breach etc

| Commentary

116 Termination of the shareholders’ agreement for breach etc

Where the breach is of a strict condition of the contract or the effect of the breach is sufficiently serious, sometimes rather misleadingly referred to as a ‘fundamental breach’, it is possible that the innocent party or parties may be able to terminate the shareholders’ agreement as a result of the breach1.

It seems reasonably clear that this is the case in a bipartite agreement. If shareholder A commits a fundamental breach, then shareholder B may end the agreement. The situation is much less clear-cut where the agreement is multipartite. For instance,

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