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Shareholder dispute solicitors
Shareholder and/or director disputes are common. The causes vary, ranging from personality clashes through to where majority shareholders deliberately act in their own interests, diverting business away, strategic disagreements, deadlock or where shareholders who are not directors are refused access to information.
We are highly experienced in dealing with shareholder and director disputes. As a court directed solution is highly expensive, slow and can result in huge damage or even the winding up of your business, any lawyers you instruct should seek to avoid this and they need to be experienced, commercial, creative and tactical.
Call or email us to find out why we have all these attributes and how our lawyers can help with your shareholder dispute.
Check your articles and shareholder agreement first
Your company may have standard articles and either no or a very basic shareholder agreement. If this is the case, it will probably make your dispute harder to resolve. If you do have amended article sand/or a detailed shareholder agreement, these may include :
- Process for dealing with a deadlock if you have a 50:50 shareholder structure
- Clauses which protect minority shareholders
- A process for removing directors if that is being considered as part of the dispute
- Restrictions on the powers of directors to take on contracts, debt or make important decisions
- Legal protections to deal with a situation where some directors are seeking to implement a dividend policy which is not to the benefit of all
- Clauses which clearly set out what should happen in the event of a serious dispute. These may include a valuation provision and a process where shareholders have the right to buy out others.
- Provisions dealing with what constitutes a conflict of interest, restrictions on competing business interests and requiring shareholders and/or directors to act in the best interest s of the business.
Possible outcomes of a shareholder dispute
- Splitting the business assets – rarely an ideal solution and complicated and messy and likely to cause damage to the future prospects for all concerned.
- Buy out – this may also involve negotiations around deferred payment to the departing shareholder or some form of inducement for the departing shareholder to benefit from future success without remaining as a shareholder. Sticking points will also generally include valuation of the business and the shareholding of the shareholders who would need to depart to resolve the dispute. Valuation can be done in numerous ways and will generally be an expensive exercise involving expert advice from accountants and others.
- Negotiated resolution involving future protections for aggrieved shareholder – this may mean alterations to the articles or a new or amended shareholder agreement protecting the concerned shareholder in future by way of enhanced blocking or veto rights, better access to information, a clear process for future disputes, enhanced anti-competitive restrictions.
- Removal of directors or amendment or enhanced restrictions on or oversight of a director or directors.
- The business is sold to an independent buyer
Court claims for shareholders disputes
Shareholder disputes that reach a trial at court should be avoided wherever possible. If this happens, the business may be terminally damaged. Sometimes, it is necessary to start court proceedings in order to exert pressure on the opponents but a parallel track of negotiations is almost always important.
The types of shareholder dispute court claims usually include :
- Applying to the court for a declaration
- A claim that the company should be wound up as a way to resolve the dispute – this is the nuclear option.
- Where the dispute is based on minority shareholders claiming that the majority are running the company for their own benefit only, an unfair prejudice petition.
- A section 994 of the Companies Act claim which is actually brought by the company and is known as a derivative claim. There are some hurdles which must be overcome to satisfy the court this type of claim should be allowed at the outset.
Shareholder disputes Solicitors in London
We are highly experienced in dealing with shareholder disputes and helping clients get the best available outcome where a dispute arises.