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Shareholder Disputes

The law relating to shareholder disputes can be extremely complex and technical. That is why early advice is essential to prevent matters from escalating. Glanvilles’ commercial team have a proven track record in helping shareholders mitigate risk and find sensible solutions to shareholder disputes.

A shareholder dispute can be extremely damaging and disruptive to a business, posing a significant financial and reputational risk. They can arise for a multitude of reasons, especially where there are competing interests of shareholders and directors. Financial worries, poor direction, or differing expectations can also play a big part in disagreements escalating into costly court battles.

At Glanvilles, we know a sensible resolution to a shareholder dispute is in the best interest of all involved. Our expert commercial team have wide experience in successful negotiations, mediation and litigation, when necessary, to resolve even the most complex disputes.

Our shareholder disputes resolution lawyers can advise and assist you with:

  • Shareholder agreements
  • Changes to articles of association
  • Rights and obligations of shareholders
  • Breaches of agreements and duties
  • Director performance issues, misconduct, suspension and removal
  • Share valuation, buy outs and buy backs
  • Splitting the business, company restructures, sales, demergers and hive outs
  • Variation of rights
  • Mediation
  • Court action, including orders for dissolving or winding up a business, minority shareholder unfair prejudice petitions and derivative claims

Glanvilles’ commercial litigation team have a wealth of experience and sector specific expertise, which enables us to provide clear, straightforward and practical advice. By applying the ultimate combination of knowledge and tactics, we can deliver effective solutions to prevent, manage and resolve even the most acrimonious shareholder disputes.

We work with shareholders and directors in Chichester, Fareham, Havant and across the wider Hampshire and West Sussex area, giving bespoke advice and representation for achieving a positive outcome.

Get in touch for partnership dispute legal advice

Speak to one of our expert shareholder dispute resolution lawyers in ChichesterFareham or Havant or fill in our simple online enquiry form for a quick response.

Why choose our shareholder disputes solicitors?

Glanvilles’ shareholder disputes team will always aim to help you achieve a quick and amicable resolution to your dispute, seeking to manage risk and avoid lengthy and costly litigation.

We have specialist expertise and an excellent record of success in the use of mediation as an effective method of resolving shareholder disputes. We are often successful in reaching an agreement without needing court action, which is a quicker and more cost-efficient method of settling a dispute.

We can advise you of your legal rights and explain the best strategies and course of action to follow, working to try and resolve matters without the need for litigation.

If legal action is required, we will make sure your case is strong and that you have the expert representation you need to achieve the best possible outcome in court.

The Glanvilles’ client service promise

When you instruct our shareholder disputes lawyers, we promise:

  • Our staff will be friendly, respectful, and attentive
  • Your concerns will be listened to, your questions answered, and your options explained in plain English
  • The cost of dealing with your requirements will be made clear to you from the outset
  • We will answer your phone calls and emails promptly
  • We will keep you regularly updated at all times

The Glanvilles guide to shareholder disputes

What are shareholder disputes?

A shareholder dispute is a disagreement between a company’s shareholders. Often, these disagreements arise over how the company is being run and managed.

There may be differing opinions over issues such as the direction of the company, dividends and salaries, power struggles between shareholders and directors or poor personal relationships between individuals or groups of shareholders.

Where there are financial pressures, disproportionate contributions given in time and money, or where there are conflicts of interest, fall outs can easily happen.

In many instances, shareholder disputes occur when a majority shareholder is blocked by minority shareholders. In other circumstances, it might be that a minority shareholder is being pressured by a majority shareholder to accept something they don’t agree with. Sometimes, it might be that one shareholder or a group of shareholders act together to try and override the wishes of a minority shareholder.

What rights do shareholders have?

Shareholders or ‘members’ of private and public companies in the UK have certain statutory rights which depend on the rights attached to their shares under the company’s articles.

Shareholders rights will typically include:

  • To inspect company registers, statutory books and constitutional documents
  • To call and attend general meetings and vote
  • Ownership and the right to transfer ownership
  • To receive dividends
  • To final distribution on the winding up of the company
  • To be consulted before the company takes a particular course of action and give shareholder consent
  • To decide on the appointment of directors
  • To take legal action for wrongful acts

Often, just exercising these rights is all that is needed to resolve a dispute, particularly where matters can be addressed and discussed openly at a shareholder meeting.

What happens when shareholders don’t agree?

In the first instance, it is advisable to check any existing company documentation, such as a shareholder agreement or articles of association, which will set out the main rules that govern the company and shareholders. Within these documents, there may be provisions to assist in resolving a disagreement before it can escalate, which can provide one the best ways of saving unnecessary conflict, time and expense.

We recognise that not all businesses have detailed articles or a shareholders’ agreement in place. When a disagreement arises, it can present a good opportunity to negotiate a shareholders’ agreement which will set out how the company will be run and managed as well as what the decision making powers and limits shareholders will have. This may or may not help in resolving an existing disagreement, but it can help avoid further problems going forward.

Most disagreements between shareholders can usually be resolved through voting power at a general meeting. This often enables frank and face-to-face discussion of the issues of concern, so an amicable agreement can be reached.

How do you resolve shareholder disputes?

Where there is a shareholders’ agreement in place, enforceable grounds may exist to reach a quick and simple resolution with other signatories under the terms of the agreement.

Where written agreements and meetings can’t resolve matters, there are various other courses of action available to shareholders that may help end a dispute, including:

  • Appointing new directors or advisors - to negotiate and mediate with impartiality and a fresh perspective
  • Removal of a director
  • Independent share valuation - to agree on what price a shareholder should be bought out
  • Company buy back of shares/dilution of shares and cancellation
  • Share buy outs by external buyers or one of the parties
  • Company sale - for a fair and equitable clean break for all parties
  • Splitting the business – so it can be reorganised, enabling shareholders to go their separate ways
  • Variation of rights – allowing shares to be varied and certain rights withdrawn
  • Deferred consideration – to defer consideration payable for shares for cash flow purposes
  • Mediation - with an independent lawyer before court action
  • Court action - including just and equitable winding up orders, unfair prejudice petitions and derivative claims against directors and third parties for wrongdoing

Can shareholders take directors to court?

Whilst directors are in charge of the day to day running of a business; it is shareholders who have ultimate power.

The Companies Act 2006 sets out the duties and responsibilities of directors with a requirement for them to act in good faith and in the interests of the company. It is often the case that shareholder disputes arise out of directors being in breach of their duties or are guilty of wrongdoing.

It is possible for a minority shareholder to bring a claim in the name of the company (a derivative claim) on behalf of the company for wrongdoing against a director, for example, or rely on statutory protection available to minority shareholders.

Where relationships between directors and shareholders reach deadlock, then a shareholder can apply to the court for a winding up order. Here, the court may decide that it is ‘just and equitable’ for the company to be wound up.

Get in touch with us for shareholder disputes legal advice

Give us a call at your local branch in ChichesterFareham or Havant or fill in our simple online enquiry form for a quick response.