It is important to recognise and deal with any company disputes early on to avoid the problems escalating. Company disputes are draining, time-consuming, and disruptive to say the least. They can also restrain workability within the business and affect its reputation.
Directors have a duty to control the Company pursuant to the Articles of Association. They have the right to make decisions of the Company, raise finance, and manage the Company. Generally, the board of directors must act as a majority in making decisions, and must act in good faith and with the interests of the company in mind at all times pursuant to the Companies Act 2006. A breach of such duties may result in a claim for damages by way of compensation.
Shareholder and director disputes
Shareholders hold the ultimate power within the company because they hold a ‘share’ in the company. This gives shareholders a right to take control of the directorship; dismissing and appointing directors. In some cases, a shareholder might feel like he/she is being treated as a minority. A minority shareholder may have rights to claim against the company, for example, for unfair prejudice.
Shareholder and directors disputes within companies can arise in many forms. It might be a disagreement about the management or future of a company, or concern over the route to termination of business relations. Alternatively, there might be concern over business relationships between shareholders/directors, or poor performance.
Ideally, the anticipation of disputes will be provided for in the company’s articles of association or shareholder’s agreement. This can often provide insight on how the disputes are governed, and any method of resolution between the shareholders and directors such as mediation, or round table discussions.
In the event that efforts to discuss settlement are not fruitful, you may need to seek direction of the Court. You may feel aggrieved and no longer want to be a part of the company structure.
Why choose Edwards Duthie Shamash?
If you are involved in a company dispute, whether it is a shareholder or partnership matter, we are able to provide commercially and economically sensible and realistic advice on the remedies available to you with your business needs in mind, and we can pursue the appropriate action.
We are mindful that businesses often do not want to engage in embroiled litigation and therefore we can advise you on alternative dispute resolutions such as mediation, arbitration or negotiation. If however, litigation is the desired remedy for you then we can advise and represent you in the most appropriate proceedings for your business.