We were instructed to advise minority shareholders in relation to a dispute with majority shareholders arising from a previous offer to acquire the majority shareholders’ stake in a private company.
The minority shareholders made their offer to acquire the majority shareholders’ shares based on financial information that had been disclosed. An offer was made for an agreed amount. Subsequently it was discovered prior to completion of purchase of their shares that the valuation had been inflated, allegedly fraudulently.
The client was advised to argue that they had been deceived by misrepresentations by the majority shareholders. The clients alleged fraudulent misrepresentation so to rescind i.e. terminate the contract to purchase the shares. This was followed by a claim alleging unfair prejudice.
The case resulted in the client not having to purchase the shares, but selling their own shares to resolve the overall dispute.