Company Shareholder Disputes

Company Shareholder Disputes

We have wide experience in dealing with internal company shareholder disputes.

The overwhelming majority of limited companies registered in England and Wales are small to medium enterprises.  These companies are likely to be owned and operated by a small group of individuals.

When dealing with a limited company, it is very important to remember that the company is a legal entity of its own.  It is quite separate to and distinct from its directors and shareholders.

Most company disputes arise where there is a dispute between individuals.  Although the roles of director and shareholder are different, it is common for directors to also be shareholders.  Disputes arise for all sorts of reasons, but the way in which they can be resolved will often depend upon the balance of power.

Although the day-to-day running of a company is the responsibility of the directors, ultimate power often rests with the shareholders because they have the power to remove directors.  That having been said, the relative powers of directors and shareholders are subject to the Articles of Association of the company and any shareholders’ agreement which may exist.  These documents are crucial when it comes to dealing with any disputes.

One of the most common types of dispute in relation to limited companies is where one shareholder (i.e. a minority shareholder) claims that his or her interests are being unfairly prejudiced by the actions of others within the company (i.e. the majority).  Sometimes, disputes can be resolved amicably.  In most cases, however, the solution is for party to “buy out” the other for fair value.

Where the parties can agree that a buy out should take place, that is a significant step forwards.  However, the issue of what the shares to be sold are worth (and how they are to be valued) is a critical one.  There are various different ways of valuing shares and the correct methodology in any given case is as much a question for the lawyers to consider as it is for the accountant undertaking the actual exercise of valuing the shares.

Minority shareholder disputes can be very complicated and expensive.  However, we have successfully resolved many such disputes at mediation without the need for litigation.  Where litigation is inevitable, we believe that it is important to ensure that you have expert representation and we are able to offer you the very specialisation you would need.

Key Contacts

Contact us at dispute@berrysmith.com or on 029 2034 5511 for a no obligation discussion or further details.

Share This Content