Disputes over the ownership and running of a business can bring the business to a halt. Internal problems can severely hinder the day to day activities of the business itself and are ideally resolved swiftly and commercially.
Director, shareholder and partnership disputes
Disputes over the ownership and running of a business can bring the business to a halt.
Director, Shareholder and Partnership Disputes
Director disputes may arise when the action the company should take cannot be agreed. Sometimes a director may be in breach of its duties and actually causing damage to the company.
The articles of association often contain provision for how a director can be removed or how a dispute can be resolved, as does the Companies Act 2006.
A director dispute should be resolved quickly and commercially, to limit the damage caused to the company itself.
Shareholder issues are often intertwined with director disputes. However, the status of a shareholder, is very different from that of a director.
A shareholder might not have any day to day or active role in the running of the company. However, he has a vested interest in the performance of the company.
A shareholder has rights and can bring legal action if his shareholding is being prejudiced, for example because the conduct of the directors is damaging the company.
The rights and mechanisms for resolving a shareholder dispute may be contained in a shareholders agreement. However it is common for companies to fail to put shareholder agreements in place. If there is no shareholders agreement, there may be some provision in the articles of association.
Shareholder disputes have to be considered carefully and in particular it needs to be decided whether the cost of litigating is worth the effort. In small companies of a small value, it is better to strike a deal rather than becoming engaged in lengthy and expensive litigation.
Partnerships are different from companies but often the same types of problems arise. Again, it is best to resolve disputes early.
Having a partnership agreement is very helpful in resolving disputes but many partnerships do not have them. Where no partnership agreement is in place setting out how to resolve disputes, partners rely upon the Partnership Act of 1890.
Get in touch online
Fill in your details below and a member of our team will be in touch.
Paul Hatton - Head of department
Paul takes pride in being a “problem solver” for his clients. In commercial litigation and employment matters he advises clients on a broad range of disputes and problems in the civil courts, striving to nip problems in the bud and minimise the impact on you or your business. Paul studied law at the University of Liverpool and qualified in 2005. He joined Dootsons in 2013, after working for law firms in Bolton and Altrincham, and became a Partner at Dootsons in May 2016. Paul is also an LSM accredited mediator.