Shareholder Disputes: What you NEED to know [GUIDE]

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Resolve issue at general meeting

General meetings are designed for shareholders to discuss aspects of the company. You should address the issue you are having during a meeting. Shareholder disputes are often discussed, negotiated and resolved this way.

Buy out

If you want to avoid a dispute all together, you can purchase the shares owned by the other shareholder (or shareholders). This way the other shareholder can decrease their responsibilities and cut their losses.

Negotiation

You can hire a dispute resolution specialist such as a solicitor to negotiate for you. They will reach out to your business partner and will try to come to find a solution that both sides agree with. This is cheaper and faster than going to court.

Mediation

Mediation is a process where an independent third party tries to find a solution that will end your dispute. You can hire a solicitor to represent you during mediation. Using mediation is often cheaper, more effective and faster than going to court. If you choose to take the dispute to court, a judge will likely ask you to first try to resolve the issue in mediation.

Going to Court

If nothing else works, there are a number of professional and private claims you can make to a court. These include personal claims, breach of contract claims, negligence claims and prejudice claims. You will need to hire a solicitor to go to court as well as pay court fees. This is the longest and most costly option, however, it guarantees that your shareholder dispute is legally resolved.

Step 1

Talk to a Solicitor

You should seek advice early on in your Shareholder Dispute. A solicitor will advise you on what your best next step forward is, based on your situation.

Step 2

Claim under the Shareholders Agreement

If the company has a Shareholder Agreement, your solicitor will explain what rights and protections you have according to the document. If you can prove there are shareholder rights, rules or obligations that are not being followed in line with the Shareholder Agreement, your solicitor will help you argue a case that the agreement has been broken. The court will resolve your dispute and decide if a shareholder has breached their duties under the Shareholder Agreement.

Step 3

Derivative claim

Your solicitor will advise you to make a derivative claim if your issue is with the director of the company. A derivative claim means going to court and arguing that your dispute has been caused by the director of the company for reasons of negligence or breach of duty.

Step 4

Claim of Unfair Prejudice

If your dispute is about fairness or prejudice, your solicitor will apply to the court for an unfair prejudice petition. The court will make a final decision, if they have found unfairness, they will punish the guilty shareholders by taking away their shares.

Step 5

Seek Compensation from the Company

Your solicitor can advise you to personally sue the company you have a Shareholder Dispute with. Depending on your case, this could be you suing for an injunction, specific performance or damages.