Shareholder disputes are on the rise, a major contributing factor to this has been the impact of turbulent markets following covid-19, these in turn have led to increased pressure between shareholders. Many disputes are complicated by the absence of a written shareholders agreement, which is not unusual with smaller companies, where parties go into business together without any expectation of falling-out, or without considering the implications of encountering any financial difficulties.
This is not to say that shareholder disputes are limited to smaller companies, Ramsdens have advised on and been involved in numerous shareholder disputes for companies ranging in size.
We have advised both majority and minority shareholdings.
How can a shareholder dispute be avoided?
Under the Companies Act 2006, all limited companies are required to have articles of association and a memorandum of association that are available to view by the public. Articles of Associations are the “rule book” of a company and are legally binding. However, many companies incorporate model articles of association that prescribe standard terms from the Companies Act 2006 and are often unhelpful when attempting to resolve shareholder disputes.
A company can customise its articles of association and that can include details ranging from the day to day running of the business, conflicts of interest, how directors are removed and appointed and voting rights among other things.
A company can also incorporate a shareholders’ agreement is an enforceable contract between the shareholders of a company and the company. They protect and set out each parties rights and remedies and often account for eventualities in which disputes may arise, and how they are to be resolved.
A shareholders’ agreement can be prepared at any time, remains private, and can be a useful way of reaffirming the rights and obligations of all the members within the certain company. They can be incorporated to overpower model articles of association.
What to do if an issue arises?
Shareholder disputes can be hugely distressing, can cause great emotional stress to the parties involved and drain management time from the day-to-day running of the business.
It is always best to seek specialist legal advice early on when encountering a shareholder dispute, many shareholder disputes are complex and Dispute Resolution can be an expensive process if not resolved efficiently, it can also have adverse implications on a company’s reputation and business.
How we can help you?
Ramsdens has many years experience in advising in this particular area of law and we are well versed in dealing with shareholder disputes whether it be via mediation, alternative dispute resolution or at trial.. Our aim is to resolve any dispute, whether you are a majority or minority shareholder, swiftly and efficiently, while advising you on ways to best protect your interests and offering advice at a cost-effective and competitive rate.
Ramsdens has the added benefit of a specialist Corporate team which works closely with our Dispute Resolution department and therefore, are on hand to prepare and provide advice all the way from the creation/amendments of articles of association and shareholder agreements to finalising and getting the best possible outcome in shareholder disputes.
If you have a dispute, please contact our Dispute Resolution team. Our team have advised and acted for numerous companies and shareholders, and have extensive expertise on shareholder disputes.
To contact our Corporate team here to discuss the drafting of new articles of association, shareholder agreements and for the review of existing company articles.
In addition, should you need further help and advice, we are experts in:
- Breaches of Director’s Fiduciary Duties
- Unfair Prejudice Petitions
- Company Deadlock- Winding-up of a company
- Breaches and Enforcement of Shareholder Agreement
Please do not hesitate to get in touch for a confidential conversation. We have a team of talented and vastly experienced specialists committed to providing excellent advice. Call us on 01484 821500 or email us at info@ramsdens.co.uk.