In determining whether the clause constituted a sanction, Bergin CJ considered that CRA Limited was opposed to NZ Goldfields Investments – Anor  VR 870 (NZ Goldfields), in which a defaulting party was required to transfer its joint venture shares at a fair market value of less than 5%. In this case, there was a “good economic reason for the 5% discount,” and the clause was in place. Since Dunlop, the courts have focused on considering possible sanction clauses to determine whether a clause provides for a disproportionate payment or whether the payment is actually compensated. The relevant factors that can be considered at the time of the contract are the relationship between the parties at the time of the contract, the origin and discussions on the clause, the negotiating position of each party and the degree of imbalance between the amount to be paid and the harm suffered by the non-failing party. The reasons for a shareholder pact are that many problems can arise when a company with only two founders is created. Assuming that the founders are equal shareholders, each will have half the shares, and each will be appointed director and therefore have the same voting rights. This means that in the event of a dispute, decisions are blocked until the two founders reach an agreement on a solution. Certain clauses in your shareholder contract can help prevent escalating litigation and the breakdown of the relationship. When developing shareholder agreements, it is important to consider cases such as Pioneer to ensure that mandatory transfer clauses do not result in a penalty.
This document analyses the mechanisms available in the event of a failure of a shareholder agreement under Angolan law. All shareholder agreements should have a clause for each default. Failures include situations in which a shareholder becomes incompetent, becomes incapable of acting, violates obligations under the Corporations Act, conducts behaviour on the margins of the company that discredits the company, etc. When a company has more than one shareholder, shareholders are advised to enter into a written shareholder pact to meet their expectations and to anticipate any disputes that may arise between the parties to the shareholders` pact.