What was broken
One of three co-founders of a consumer-app company decided to step away to pursue a different path. The remaining founders wanted an amicable, fully documented separation, but there was no shareholders’ agreement governing exits, and the departing founder held both equity and unvested commitments. An unstructured exit risked future disputes and complications in the next funding round.
What we did
CapEasy structured the separation as a legally clean share transfer — coordinating an independent valuation, drafting the transfer and settlement documentation, recording board and shareholder approvals, completing statutory filings with the company registry, and addressing the tax implications for both sides. We also put a shareholders’ agreement in place to govern any future exits.
Where it landed
The founder exited on agreed terms with full documentation, leaving the cap table clean and dispute-free. The remaining founders retained clear control and entered their next fundraising conversation without unresolved ownership questions.
A founder leaving is either a share transfer or a buy-back — and Australia treats them differently
When a founder exits an Australian proprietary company, the shares go one of two ways: transferred to the remaining founders (or a new holder) for consideration, or bought back and cancelled by the company itself. A buy-back is not a private arrangement between shareholders — it is a company transaction governed by Division 2 of Part 2J.1 of the Corporations Act 2001, and ASIC’s Regulatory Guide 110 sets out what a company must do to run one, including which buy-backs need member approval and which fall under a narrower exemption.
The distinction matters because a straight share transfer between the founder and the remaining shareholders is a private sale — no company resolution, no buy-back notice — while a company buy-back triggers the statutory procedure, the cancellation of the shares, and a reduction in issued capital that has to be reflected everywhere the share structure is recorded. Deciding which structure fits, on legal advice, is the first step; the paperwork discipline that follows is the same one this engagement ran on the other side of the transaction.
The register of members and ASIC both have to agree with what actually happened
Every Australian company is required to keep a register of members under sections 168–169 of the Corporations Act 2001, and that register is the primary evidentiary record of who holds what — section 176 gives it evidentiary value in a dispute, and section 173 gives members and others a right to inspect it. A founder exit that changes who holds shares, or how many shares are on issue, is not finished until that register is updated the same day the transfer or cancellation takes effect — not weeks later when someone asks.
ASIC also needs to know. Company details — including share structure and member changes — are maintained through ASIC’s company update channels, and getting that update wrong or late is exactly the kind of gap that surfaces the next time a lawyer or investor pulls a current company extract. The method that closed this engagement — reconcile the register, get the approvals on paper, then notify the regulator — is the same order of operations an Australian exit needs: fix the source record first, report the change second.
Board and member approvals are not a formality — they are the audit trail
The engagement recorded board and shareholder approvals for the transfer as a matter of course, alongside the transfer and settlement documentation and an independent valuation. An Australian exit needs the equivalent trail: a board resolution approving the transfer or buy-back, a shareholders’ agreement (or the company’s constitution, if no SHA exists) checked for any pre-emptive rights or approval thresholds the exit has to satisfy, and — where a buy-back is used — the member approval RG 110 requires unless the company relies on the small proportionate or employee share scheme exemption.
Where CapEasy’s work sits is on the file that supports all of this: the ownership ledger reconciled to the resolutions and transfer documents, the register updated to match, and the numbers behind any settlement payment prepared and tied to the books. The tax treatment of a buy-back or a departing founder’s payout, and any lodgement with ASIC, is confirmed by your registered BAS or tax agent and your company’s legal adviser — we prepare the file they sign off on.
What to take from it
- Decide early whether the founder’s exit is a private share transfer or a company buy-back — Division 2 of Part 2J.1 only applies to the latter, and it changes the whole approval process.
- The register of members is the record a dispute or a diligence request will test first — update it the day the transfer or cancellation takes effect, not after.
- A company buy-back needs a documented approval path under RG 110 unless a specific exemption applies; do not assume a verbal agreement between founders is enough.
- Board and member resolutions are the audit trail, not paperwork for its own sake — keep them next to the transfer documents and the valuation that set the price.
- Put a shareholders’ agreement in place at the same time, so the next founder exit runs on rules instead of another one-off negotiation.