Shareholder disputes can arise for many reasons. They will generally occur most often in companies that are formed between family or friends and that are informally run, otherwise known as a 'quasi partnership'.
The most common causes of shareholder disputes, or boardroom disputes, are disagreements over company strategy, the level of dividends paid or shareholder salaries and the level of financial or time contributions made by shareholders.
Situations become particularly difficult when minority shareholders are disadvantaged by majority decisions, or where directors are also employees and as such, are covered under employment law.
Business disputes of any nature can be complex and costly, both in terms of finance and business reputation. Therefore, it is in the interests of all shareholders that any dispute is resolved quickly.
If you are in the process of forming a new company, it would be prudent to consider having a shareholder agreement in place. The articles of association will help to some extent, but a carefully drafted shareholder agreement can act as a safeguard and help to minimise disputes in the future.
A good shareholder agreement will cover all the potential areas of dispute and, as far as possible, anticipate likely areas of dispute in the future, such as refinancing, transfers or sales. It will also cover ‘deemed transfers’ where, for example, the death of a shareholder requires either the sale or transfer of shares.
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Our expert team will act quickly to help you to protect your business interests, whether it is resolving a dispute, drafting a shareholder agreement or handling an employment law issue.
We can also help with:
- Professional negligence issues
- Partner disputes
- Contract disputes
- Employment law issues