Disputes between people are a common fact of life, and are especially common when money is involved. It should come as no surprise, then, that disputes between company shareholders happen relatively frequently, and occasionally reach a level which requires legal intervention.
Our Solicitors represent shareholders in company disputes both locally in Wiltshire, Hampshire, Dorset and Somerset – and throughout England and Wales – from our offices in Salisbury, Andover, Fordingbridge and Amesbury.
Stuck in a Shareholder Dispute? Need to know where you stand? For FREE initial legal advice simply call our Solicitors now on FREEPHONE 0800 1404544 or Salisbury (01722) 422300.
Shareholder Disputes – Our Business Litigation Specialists
Arguments between shareholders can be both complex and can prove very expensive to solve. That is why it’s critical, that the solicitors you appoint have the right experience. Our team have the expertise you need.
The head of our business dispute team, David Patterson, is a member of the Commercial Litigation Association (CLA) – the UK’s only group of expert commercial litigation and mediation professionals.
Common causes of shareholder disputes
Among the disagreements between shareholders which our team come across most regularly are the following:
• The direction and strategy of the company — Occasions when shareholders disagree about the direction the company is taking.
• Dividends — Disagreements over the frequency or amount of dividends taken out of the company by directors.
• Shareholder salaries — When shareholders also work for the business as an employee, they may be entitled to a salary. Some shareholders may choose not to take a salary as well as dividends, whereas others may disagree.
• Equal contributions and input — One or more shareholders may become disgruntled at what they perceive to be a comparable lack of input and contribution by another shareholder.
• Conflicts of interest — If one shareholder is involved in another competing or related business, this may be considered a conflict of interests and tensions may rise as a result.
• Buying out or dismissing a shareholder — The cost of buying out a shareholder can be high, and disagreements can easily occur over this.
Even the most seemingly insignificant of disputes can easily blow up, particularly if one or more shareholders feel they are being overruled or ignored in their concerns.
If the shareholders are split over a certain issue, this can cause deadlock and stall the progress of decisions or responsibilities which need to be carried out by the shareholders.
Any reduction in business activity whilst disputes are being resolved can cause real financial problems for a business, resulting in lowered profits and even more disgruntled shareholders.
The potential for damage caused by these sort of disagreements to the company, its business operations and profits is huge — and that’s why any shareholder dispute should be taken very seriously indeed, and specialist legal advice taken at the earliest possible stage.
Click here to find out more about the particular issues affecting minority shareholder disputes
How do I avoid a shareholder dispute?
Although a dispute will almost always occur at some point during a company’s operation, the likelihood of it occurring — and the potential damage it can cause — can be limited by effecting proper forward planning.
To limit the risk of these kind of damaging conflicts, it’s very important that a shareholders’ agreement is put in place up, and that it covers a number of potential pitfalls, such as:
• Salaries, dividends and fees paid to directors
• Shareholders’ responsibilities
• The objectives of the company
• How the company is to be financed
• How shareholders can be bought out
• What the process and logistics of major decisions will be
Click here to find out more about Shareholder Agreements – and what a well drafted agreement should contain
Shareholders agreements – the need for specialist legal advice
Drawing up a shareholders’ agreement isn’t as straightforward as it sounds, and you’ll want to make sure it’s been done by an experienced and specialist business law solicitor who will be able to make sure you’ve covered all the necessary areas and that the agreement will stand up to scrutiny. After all, an experienced business solicitor will know what problems usually crop up and will be able to help you mitigate against them.
The potential for disharmony and disputes among shareholders is high, and the damage that can be caused by a dispute could be very damaging to the business, especially when shareholdings and profits are at stake.
Dispute resolution is vital to being able to move forwards and ensure the future success of the business. Resolving a dispute can be delicate and complicated, especially if rules and regulations have not been complied with. There are likely to be many issues and potential solutions which haven’t yet been considered, and a qualified, experienced business solicitor will be able to advise you as to these. After all, it’s commercially sensible to ensure that the dispute is resolved as quickly and effectively as possible.
The importance of dealing with disagreements at an early stage
All shareholders and anyone else involved in the business would undoubtedly agree that the best thing for the business would be for it to be able to move forward without disputes and disagreements, and to continue building and developing. For that reason, if a dispute does arise, it is important that it’s resolved quickly and effectively.
Worried about a Company Disagreement? Call our Shareholder Disputes Solicitors for FREE initial phone advice
Should a shareholder dispute arise in your business, it is important to get the right legal advice to clarify the situation, its ramifications and possible ways in which it could be resolved.
The short-term costs of speaking to a business solicitor are likely to be minimal compared to the potential damage that could be caused to your business and the livelihoods which depend on its success.
And what’s more, our specialist commercial law solicitors always offer FREE initial phone advice
Call one of our team now for free initial phone advice on your shareholder dispute – locally on  422 300 or on FREEPHONE 0800 1404544