Planning to Sell? How a Share Sale Became a Forced Exit — and What Every Seller Should Learn From It

They set out to sell part of their stake in Melbourne Airport. They ended up losing all of it. If you hold shares in a company with a shareholders’ agreement and you’re planning to sell those shares, there are clauses in the shareholders’ agreement that could cost you far more than the deal you’re trying to do — and a recent court decision shows exactly how.

Based on: Dexus v Australia Pacific Airports Corporation [2026] NSWSC 600.

Introduction

You’ve decided to sell a shareholding. It might be a strategic exit, a liquidity event for investors, or simply the right time to move on. You engage advisers, set up a data room, and start running a sale process.

But here’s the question many sellers don’t ask early enough: if the company has a shareholders’ agreement, what obligations does that agreement impose on you as a seller, and what happens if your sale process inadvertently breaches them?

In May 2026, the NSW Supreme Court handed down its judgment in a dispute over Melbourne Airport. The case involved a shareholder disclosing highly sensitive company information to potential buyers without following the process its shareholders’ agreement required. The result? A default notice and a forced sale of its entire shareholding and the shareholdings of its affiliates.

If you have shares in a company that is governed by a shareholders’ agreement or similar contract between its shareholders, this case is directly relevant to how you run any sale process.

What obligation did the seller miss?

The shareholders’ agreement in the Melbourne Airport case contained a confidentiality clause that most sophisticated shareholders’ agreements include in some form. It said, in effect: if you want to share the company’s confidential information with a prospective buyer, that buyer must first enter into a deed of confidentiality with the other shareholders, in a form to their reasonable satisfaction.

That’s a process requirement, not just a confidentiality requirement. Many sellers focus on confidentiality itself. The critical point in this case was different. The clause imposed a process requirement as well as a confidentiality obligation. It gave the other shareholders a say in who received their company’s sensitive information, and on what terms.

The seller, the Dexus group, controlled or managed a combined 27.32% shareholding in Melbourne Airport, ran a competitive sale process without following that process. It used what it contended was a confidentiality deed template previously agreed by all shareholders (which it could not prove) and gave potential buyers access to a virtual data room containing the company’s 20-year financial model, assumptions, airline negotiation parameters, tenant lease details, and capital expenditure plans. None of this was flagged to or approved by the other shareholders.

What the court said

The court confirmed several principles that may apply to any seller bound by a shareholders’ agreement (depending on the drafting of the agreement).

Confidential information can be defined broadly. The Melbourne Airport shareholders’ deed covered virtually all non-public information about the company’s operations. The court rejected the argument that information was only “confidential” if it had been formally shared under a specific provision of the deed. Any information a shareholder held because of its shareholder relationship was covered.

Process requirements are mandatory, not optional. A seller cannot substitute its own confidentiality arrangements (even “market standard” ones) for the process the shareholders’ agreement prescribes. The clause required the other shareholders to be parties to and satisfied with the confidentiality arrangements. A click-through virtual data room (VDR) protocol (a set of access and usage rules imposed by the seller through the data room platform), or a unilaterally chosen template, does not satisfy that requirement.

Disclosure of confidential information is very difficult to remedy. Once sensitive information has been shared, courts will generally treat the breach as irremediable. Return-and-destroy obligations provide limited comfort: the court found that information seen by industry specialists and advisers cannot be “unseen,” and the company has no way of knowing whether or how it has been used.

How you behave after the breach matters enormously. The court found that the seller had been evasive and at times dishonest in its responses once the breach was discovered: making false statements, hiding side letters that varied the confidentiality terms, and asking a buyer to amend its destruction confirmation to remove reference to those side letters. The court held this made the breach graver and the loss of trust between shareholders irremediable.

How it works in practice for sellers

If you own shares in a company that has a shareholders’ agreement (typically a proprietary company or an unlisted public company), that agreement will impose obligations on you as a shareholder. Depending on its terms, a shareholders’ agreement may impose a range of obligations on a selling shareholder. Common examples include:

• Pre-emptive rights. Most shareholders’ agreements give the other shareholders a right of first refusal before you can sell to an outside buyer. If you run a competitive process with external bidders before offering the shares to your co-shareholders, you may be in breach before you’ve even shared a single document.
• Confidentiality process requirements. As the Melbourne Airport case illustrates, many deeds prescribe who can receive confidential information and on what terms. If you share the company’s financial model with a prospective buyer using your own confidentiality agreement (rather than a confidentiality agreement agreed with the other shareholders), you may be in breach.
• Notice and approval requirements. Some shareholders’ agreements require a shareholder to notify or obtain approval from the board or other shareholders before commencing a sale process. Running a process quietly, even with every intention of ultimately complying, can itself be a breach.
• Transfer restrictions. Most shareholders’ agreements restrict to whom shares can be transferred. Even if a buyer is sophisticated and well-resourced, the transfer may not be permissible under the agreement without co-shareholder consent.
• Drag-along, tag-along and compulsory transfer provisions. Shareholders’ agreements may also contain drag-along rights, tag-along rights and compulsory transfer provisions that can materially affect how, when and to whom shares may be sold. These provisions should be reviewed at the outset of any proposed sale process.

Key risks and pitfalls for sellers

Starting the process before reading the shareholders’ agreement. Many sellers engage investment banks or corporate advisers, and set up data rooms before anyone has read the relevant shareholders’ agreement carefully. By the time the issue is spotted, confidential information may already have been shared with advisers and buyers who have no compliant confidentiality arrangements in place.

Relying on a historical or informal approval. In the Melbourne Airport case, the seller claimed a confidentiality template had been approved by shareholders years earlier. No record of that approval could be found. Relying on undocumented or informally understood processes is not a defence.

Using your advisers’ standard forms. Investment banks, corporate advisers and law firms often have their own confidentiality templates they use as a matter of course. Those templates are not the same as compliance with the provisions of a shareholders’ agreement that require co-shareholder involvement. You need to actively instruct your advisers on what the shareholders’ agreement requires (or have them review the relevant provisions of the agreement).

Assuming the other shareholders won’t find out. In the Melbourne Airport case, the breach of the shareholders’ deed was discovered when co-shareholders noticed that prospective buyers were asking suspiciously targeted questions at due diligence meetings. In any tightly held company, unusual activity is likely to attract scrutiny.

Underestimating the consequences. Many shareholders’ agreements contain significant consequences for a defaulting shareholder. In the Melbourne Airport shareholders’ agreement, the consequence was a forced sale of the entire 27% shareholding — not just the portion the seller was trying to sell. Non-selling members of the seller’s own shareholder bloc were caught too, simply because the agreement treated the bloc as a single shareholder.

Practical tips for sellers

1. Read the shareholders’ agreement before you start. Before engaging advisers or running any process, obtain the shareholders’ agreement for the company in which you hold the stake you wish to sell. Identify the confidentiality obligations, pre-emptive rights provisions, notice requirements, and transfer restrictions. This is the foundation of a compliant process.
2. Get legal advice on your obligations before you engage a corporate adviser. Investment banks and corporate advisers are experts at running sale processes. They are not experts in your specific shareholders’ agreement obligations. Engage a lawyer to advise you on what the agreement requires before your investment bank or corporate adviser does anything. That advice will shape your entire process design.
3. Engage co-shareholders early. If your shareholders’ agreement requires co-shareholder involvement in confidentiality arrangements or notification of a sale process, do it early. A conversation that feels commercially sensitive is far less costly than a default notice.
4. Agree the confidentiality form before sharing anything. If your shareholders’ agreement requires buyers to sign a confidentiality agreement in a form agreed with the other shareholders, get that form agreed before your data room goes live — not after. Retroactively fixing confidentiality arrangements once information has already been shared is very difficult and may not remedy the breach.
5. If something goes wrong, be transparent and take advice immediately. If you discover a compliance issue mid-process, stop and take legal advice immediately. Attempting to conceal or minimise a breach significantly increases your legal exposure. The Melbourne Airport case showed that dishonest conduct after a breach can be just as damaging as the breach itself.

Conclusion

The key lesson from the Melbourne Airport case is that a shareholders’ agreement does not merely regulate the transfer of shares. It can regulate the entire sale process, including who may receive confidential information and on what terms. Sellers who ignore those obligations risk consequences far more significant than a failed transaction.

The solution is straightforward: read your shareholders’ agreement, take advice early, and design your process around your obligations — not the other way around.

Case reference: Dexus Capital Investment Services Pty Ltd v Australia Pacific Airports Corporation Limited [2026] NSWSC 600, Hammerschlag CJ in Eq, decision 29 May 2026. This article discusses key issues arising from the judgment. It is not a complete summary of the court’s reasons and should not be treated as legal advice.

How Sierra Legal can help

If you’re planning a share sale and want advice on your obligations under a shareholders’ agreement — or a review of your shareholders’ agreements across multiple portfolio companies — get in touch with the Sierra Legal team.