Shareholder Disputes
Disagreements between shareholders can arise in any type of business. Whether the dispute concerns the direction of the company, the distribution of profits, or allegations of unfair conduct, shareholder disputes can be highly disruptive. If not resolved a shareholder dispute may threaten the viability of a business itself. We provide clear and strategic advice with regard to the bigger commercial picture to reach a resolution.
Shareholders agreements
A shareholders’ agreement plays an important role in regulating the conduct and affairs of the shareholders within a company. When disputes arise, they often centre on whether the agreement has been followed correctly or how specific provisions should be interpreted in practice. We will conduct a detailed review of any shareholders agreement and advise you on the scope and implementation of its terms.
Unfair prejudice petitions
An unfair prejudice petition is a unique form of court proceeding issued by minority shareholders who believe the affairs of the company are being conducted in a manner that is unfairly prejudicial to their interests. This could include dilution of shareholdings, failure of the company to declare a dividend, misuse of company assets, and exclusion from management.
Derivative claims
A derivative claim is a specialist type of court action brought by a shareholder on behalf of a company, usually against a director. These claims often arise where there are concerns about the way the company has been managed, including allegations that directors have failed to act in the company’s best interests or have breached their legal duties. Derivative claims can be complex and before a claim can proceed, the court's permission must be obtained.
Valuation
The value of a shareholder’s interest is often a key issue when resolving a shareholder dispute. Whether one shareholder is exiting the business, shares are being transferred or a settlement is being negotiated, understanding the value of the shares can help all parties make informed decisions. We work with trusted third parties to obtain independent share valuations where required.
Alternative dispute resolution
Litigation is not always the most appropriate route to resolving a shareholder dispute. We will advise you on alternative options to achieve a quicker and more cost effective outcome ranging from negotiation to mediation. We will document any settlement reached clearly providing certainty for the future.
Questions we’re often asked
The consequences will depend on the nature of the breach and the terms of the agreement. Remedies can include a court order requiring compliance with the agreement, compensation for any losses suffered, or, in some cases, the transfer of shares.
The primary remedy sought is the purchase of the petitioners shares for fair value. Other remedies include orders regulating the conduct of the company’s affairs moving forward or orders requiring the company to do a particular act or refrain from doing a particular act.
The outcome will depend on the circumstances of the case. Any remedy awarded belongs to the company, not the shareholder who brought the claim. For example, if a director is ordered to compensate for losses caused by their actions, that payment will be made to the company.
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