Finding a constructive way forward
Even in the closest relationships, there are times when a dispute may occur. This applies as much to business relationships as it does personal ones. Similar to how family members fall out with each other, so might the shareholders or directors of a company if their visions for the future of the business begin to diverge.
When business relationships break down, professional legal guidance can help you find the right path forward. Our expert team specialises in resolving complex disputes between directors, shareholders, partnerships, and LLPs.
Understanding director and shareholder disputes
Director and shareholder disputes occur when disagreements arise between those responsible for managing and owning a business. These conflicts can have devastating consequences for companies, partnerships, and LLPs if left unresolved.
Common causes of these disputes include:
- Strategic direction disagreements – differing opinions on expansion plans, market focus, or product development strategies.
- Financial matters – disputes over budget allocation, investment priorities, or dividend policies.
- Management performance concerns – questions about leadership effectiveness and operational execution.
- Corporate governance issues – disagreements over board composition and responsibility allocation.
- Conflicts of interest – situations where personal interests may compromise business decisions.
When individuals fall out in business, boardroom disputes can be particularly fraught and stressful, requiring careful handling to protect all parties’ interests.
Unfair Prejudice and Shareholder Remedies
Disputes may occur where a minority shareholder considers that the directors of the company or LLP are running the business without due consideration of the interests of the minority shareholder. This could include the minority shareholder being excluded from important decision making, or the directors awarding themselves high salaries or bonuses whilst not declaring a dividend. In the absence of an agreement, the minority shareholder can petition the court under section 994 of the Companies Act 2006. The court has a wide range of remedies including an order for the purchase of the shares.
Prioritising alternative dispute resolution
We recognise that litigation should often be a last resort. Our team prioritises alternative dispute resolution (ADR) methods that can resolve disputes more efficiently and cost-effectively:
Mediation
A collaborative approach where a neutral mediator facilitates discussions to help parties find mutually acceptable resolutions. This method preserves business relationships whilst addressing underlying concerns.
Arbitration
A structured, private alternative to court proceedings where a neutral arbitrator makes binding decisions based on the evidence presented. This approach offers confidentiality and expertise in complex commercial matters.
Early Neutral Evaluation
Where an independent third party reviews the dispute and provides a non-binding evaluation of what they think the outcome might be if the dispute went to court. This procedure assists all parties in understanding where things may end up and is particularly helpful if valuation of shares or business assets is in dispute.
Take action to protect your business interests
Don’t let business disputes escalate and damage your company’s future. Our expert legal team can help you identify the best method to resolve your dispute. Get in touch today.
