How to Resolve Shareholder Disputes

Grant Articles

When the shareholders of a company fall out, it can significantly harm the commercial interests of the business. That is why it is so important to resolve any disagreements as quickly and effectively as possible, allowing you to move forward and continue developing the business.

Preventing issues before they arise

Many of the common causes of disputes can be anticipated and prevented by taking the right actions when you first set up or join a company. Best practice would be to enter into a Shareholders Agreement which is a contract between the shareholders that regulates how the shareholders will work together. This document should establish set procedures for how to deal with disputes over issues such as the direction and development of the company, what each shareholder can and can’t do with or without the consent of the other)s), conflicts of interest (e.g. a director having shares in another business) or poor performance from a shareholder or director. This will reduce the potential for future conflict by making everyone’s position and expectations clear from the outset.

Mediation

If a dispute cannot be immediately resolved and there is no clear contractual direction as to the course of action that should be taken, professional commercial mediation can offer a way to find a mutually acceptable solution whilst aiming to minimise business disruption. Commercial Mediation reduces the chances of a dispute becoming increasingly acrimonious and can prevent any negative feeling between shareholders once the matter is resolved. This can also help to keep any issues within your business private and reduce the possibility of negative publicity.

Court action

Taking a fellow shareholder to court is in most cases likely to be the last resort. By litigating with a business partner it is likely that the business relationship has reached irreparable working condition to the point the law suit will cause significant harm to the business generally. It is therefore vital to discuss all of your options carefully with your solicitors and other interested parties before taking this step.

AMD’s highly experienced team of commercial solicitors in Bristol have the expertise you need to ensure a shareholder’s agreement is properly drafted (to prevent shareholder disputes arising) and to help negotiate a positive outcome in the event a dispute becomes litigious. To find out more or to book an appointment, call AMD today on 0117 962 1205 and ask to speak a member of our commercial team. Alternatively, you can contact the Head of our Commercial Department Tony Moore directly.

 

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