Shareholder Disputes

Shareholder Disputes

All too often business partners find themselves disagreeing with each other and this can lead to disastrous consequences for their business.

Why do you need a shareholder agreement?

If you have a shareholder agreement or a partnership agreement then this should provide the basis on which resolution can be reached, but these are often complex documents which require interpretation.

If you do not have any formal agreements in place to regulate your business arrangements then the position is often far more complicated and protracted and requires delicate handling. For instance, if you and your business partner do not have a partnership agreement in place then the law that governs how to deal with any dispute that you may have, dates back to the Partnership Act 1890.

Shareholder Agreements

Often when starting a new business you are excited about the ideas that you have for the venture and the possible failure or breakdown in the relationship with your business partner is not something that is considered at all. However, often businesses will fail and without comprehensive documentation in place dealing with such scenarios, you may be faced with a shareholder dispute and be forced into action that you would not otherwise wish to take.

Alternatively, you may have run your very successful business with your business partner for many years, but what would happen if your business partner was to die suddenly, would you want to continue running your business with their wife or family member? Without specific documentation in place this is the situation that you may find yourself in.

We can assist you in putting in place a shareholder agreement to deal with issues such as;

  • Who must be involved in the decision making process in the company
  • Who is entitled to appoint or be appointed as a director
  • What happens if you and your business partner cannot agree on important issues
  • Mechanisms allowing you to purchase your business partner’s shares if they leave the business, die or simply want to sell their shares
  • What happens if you find someone who wants to buy the business but your business partner refuses to join and sell their shares.

Partnerships and Joint Ventures

Partnerships can be a quick and easy way to start running a business with another person. However, without carefully worded documentation you could find yourself having to close your successful business if relations between you and your business partner breakdown, or if your business partner dies you could be forced into a business relationship with a member of your partner’s family. 

We can help you to avoid these common scenarios by putting in place some initial documentation to set out how the business is run on a day-to-day basis.

This can include;

  • The hours that the partners are expected to work and the way in which monies can be withdrawn from or injected into the business
  • Stipulate various exit strategies to ensure that you and your business partner are aware as to how you can both leave the business and whether the remaining partner should be given the right of first refusal to purchase the departing partner’s share of the business.

Joint Ventures are often pursued by way of partnership or specially formed limited company. They are a method whereby two or more companies or individuals can join resources to pursue a common goal. They are often used in the construction and property sectors and can be simple short agreements to hugely complicated transactions.

We are experienced in dealing with these types of transactions and can assist you with the drafting and preparation of a joint venture project or the negotiation of contract terms.

How can we help?

We assist many of our clients in attempting to resolve their disputes with as little detrimental effect to their business as possible. Often this will involve compromise from both parties but if compromise is not possible then we have specialist lawyers available to assist with any Court or other formal proceedings necessary to resolve the dispute.
If you need a shareholder or partnership agreement to be drafted or reviewed then please visit the business documents section of our website.
Shareholder Disputes

See also

In a dispute with your shareholders?

I feel compelled to email to say how thankful I am for my hour of your time today. Who knows right now where we will end up with my client but your advice today has really helped me see clearly where I stand legally and has given me the confidence and reassurance that reason will win in the end. Thanks so much for being available at short notice and really appreciate your advice