Where can I get more advice on company/shareholder disputes?
Richardson Lissack’s specialist team can provide you with the expert help and guidance you need on all issues relating to company/shareholder disputes.
How do company/shareholder disputes arise?
Disputes can arise between a company and its directors; for example, where a director has breached their fiduciary duties. In those circumstances, legal guidance may be necessary to consider what steps can be taken by the company to remove the director. Issues can also arise between a company and its shareholders. In such circumstances shareholders may need advice on how to make the company change its behaviour or provide financial recompense.
The importance of expert legal advice
The area concerning company/shareholder disputes is highly complex. While this article provides an overview of the key issues, it is highly recommended that individuals or companies obtain professional advice to help resolve any issues they are experiencing. Richardson Lissack has a team of specialists with a wealth of experience who will be able to provide expert assistance.
Can a director be removed?
This is an extremely technical area of law – particularly if the director is also an employee of the company and a shareholder in it.
While a director guilty of poor performance or dishonesty may have their employment terminated through standard procedures, they would remain a director unless there was a board resolution to remove them.
This might prove problematic if shareholders are split on the issue (an even greater possibility if the director in question holds substantial shares) and lead to High Court proceedings. These could prove extremely expensive for both parties as well as causing them significant reputational damage.
It is recommended, therefore, that legal advice is obtained on this issue as soon as possible.
What rights do shareholders have?
The exact rights of shareholders will depend on factors such as:
- The class of share that they hold.
- A company’s articles of association. These state the rights and responsibilities of shareholders and constitute a statutory agreement between shareholders, and between shareholders and the company.
What legal options may be available to shareholders?
- One of the main areas of conflict can be over unfair prejudice. If a shareholder feels that the company is being run in a manner that unfairly affects them (either generally or in a specific instance) they can take action to bring about change. Whether something is ‘unfair’ is judged on a case-by-case basis – underlining the need to seek legal advice.
- Sale of shares: If minority shareholders feel that the company is being run in a way prejudicial to their interests, they can apply to the court to have their shares purchased at a fair price.
- Winding-up petition: Shareholders have the right to ask for the company to be wound-up if they believe it is being mismanaged. It is strongly advised that shareholders pursue other avenues before turning to this option.