When creating the articles of incorporation of a private company, specifications should be included regarding the evaluation of shares in the event of disposal. Further, in a partnership agreement, provisions should be made in regard to the treatment of goodwill and whether assets are to be revalued in the event the partners' relationship deteriorates. The data or method of valuation is not defined. The case law regarding the valuating of shares in private companies occurs primarily in the following areas: 1. where it is claimed that an event has occurred relevant to an obligatory share transfer clause in the company's articles, and 2. where a petition for unfair prejudice has been filed under Section 459. Litigation in this area of case law is extremely expensive; thus, the additional detailed provisions are wise even though financial consequences can arise.
Full text: Accountancy, Jul 1988
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