Shareholder disputes are among the most damaging matters a company can face, because they paralyse decision-making at exactly the point the company needs to act.
Common grounds
- Oppression of minority shareholders by those in control
- Mismanagement of the company’s affairs
- Deadlock, where shareholders with equal or blocking power cannot agree
- Denial of access to company records and information shareholders are entitled to
- Improper allotment or transfer of shares diluting an existing shareholder
Statutory remedies
The Companies Act 2017 provides remedies against oppression and mismanagement, which may be pursued before the relevant forum. Relief can include regulating the company’s affairs going forward, or in appropriate cases, an order for the purchase of shares.
The shareholders’ agreement matters most
Where a shareholders’ agreement exists with clear provisions on deadlock, exit and valuation, most of these disputes are resolved by reference to it rather than by litigation. Its absence is the single biggest reason these disputes end up in court at all.
What to do next
Bring the company’s constitutional documents, any shareholders’ agreement, and the company’s recent record of resolutions and correspondence relevant to the dispute.