Disputes between shareholders

Shareholder disputes are inherently bad news but are  unfortunately quite common. These disputes can very quickly escalate and become very personal, especially as the majority of UK companies are family owned.

Before considering any kind of litigation, we strongly recommend :-

  • carefully checking the terms of any shareholder agreement in place which may clarify any areas in dispute
  • consider the possibility of mediation – if these disputes can be “nipped in the bud” it is to everyone’s benefit. If you are looking for an experienced commercial mediator with a wealth of commercial law experience, look no further than David Swede.

What causes shareholder disputes ?

There are numerous causes but they often fall into these categories :-

  • alleged breach of directors’ duties – derivative claims
  • differences over strategy & management
  • company policy on dividends
  • where shareholders or directors are paid a salary. arguments that some are paid an unfair amount
  • conflicting business interests or where some shareholders claim that others are steering business for their own benefit
  • failure to provide financial, accounting and statutory information
  • alleged exclusion from company meetings
  • breach of  company’s articles of association or shareholder agreement
  • Unfair prejudiced application

Litigation

It is always worth remembering and repeating that in almost all commercial disputes, there isn’t an outright winner, so caution and a level headed approach is very important, as are tactics. Shareholder disputes can also literally mean an end to an otherwise thriving company. Perhaps the most powerful weapons for an aggrieved shareholder are :-

  • unfair prejudice claims
  • derivative claims

For additional advice or information, please get in touch with our litigation department, headed by David Rosen.

 

 

 

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