Shareholder Disputes
Shareholder disputes can extensively disrupt business operations, leading to financial and emotional strain for shareholders; directors and employees. of a company and take a toll on the individuals involved.
Shareholder disputes commonly arise where shareholders disagree on company strategy; a shareholder’s conduct may be to the detriment of other shareholder; or where a minority shareholder is excluded from the management of the company. Regardless of the cause of shareholder dispute, it is imperative that shareholder disputes are dealt with as soon as reasonably practicable, as they can be costly and time-consuming, resulting in adjudication; arbitration; or litigation and damage a company’s business relationships and reputation.
At Mercantile Barristers, our shareholder dispute barristers have expertise in providing bespoke advice, representation and drafting services to businesses so that shareholder disputes are resolved in the first instance, amicably, but if not robustly by litigation. If you require advice contact our Commercial Litigation barristers today by filling in our Enquiry Form; emailing us at enquiries@mercantilebarristers.com; or by telephone on 0203 034 0077 and we would be happy to assist.
Shareholder Agreements
A shareholders agreement is a contract between the shareholders of a company outlining the rights and responsibilities of the shareholders. Shareholders agreements can address a number of issues, including:
- Claw back rights
- Death/serious illness of shareholders
- Dispute Resolution Procedures
- Dividend Policy
- Restrictive Covenants
- Rights of first refusal
- Rules on issue of new shares
- Veto rights of shareholders
It is not uncommon that directors may also hold shares in the company. As such, shareholders’ agreements and director’s employment or service contracts ought never to contradict each other but should always work together to stipulate the consequences for breach of either contract. For example, a majority shareholder may not want a director that has been dismissed for gross misconduct continuing to hold shares in the company. Our barristers are available to advise on such provisions.
At Mercantile Barristers, our barristers have expertise in providing advice and representation to shareholders and directors in drafting and interpreting shareholder agreements. Our barristers are adept at understanding the particular standards required of decision makers and leaders in your business; advising on the most appropriate form of agreements to curb or expand a shareholder’s authority; and drafting appropriate employment or service contracts to protect the business. If you require advice contact our Commercial Litigation barristers today by filling in our Enquiry Form; emailing us at enquiries@mercantilebarristers.com; or by telephone on 0203 034 0077 and we would be happy to assist.
Shareholder Disputes
Our shareholder disputes barristers have experience in advising and representing shareholders and directors in starting, or defending the following claims:
Unfair Prejudice Petitions
Pursuant to section 994 of the Companies Act 2006 (“the 2006 Act”) a shareholder of a company may petition the court for a remedy where: (a) the affairs of the company are being, or have been, conducted in a manner that is ‘unfairly prejudicial’ to the interests of other shareholders; or (b) an actual or proposed act or omission of the company is or would be so prejudicial.
Examples of ‘unfair prejudice’ include:
- Allotting additional shares in the company in order to dilute a minority shareholder’s shareholding.
- Breach of contractual and/or fiduciary duty
- Failure to pay dividends, without good reason
- Mismanagement of company affairs, including funds and assets
Where unfair prejudice petitions are successful, the court has a wide discretion to make whatever order it deems appropriate. The usual remedy awarded to successful petitioners is to order that their shares be purchased by those who caused the unfair prejudice.
If you require legal advice on unfair prejudice petition claims contact our Commercial Litigation barristers today by filling in our Enquiry Form; emailing us at enquiries@mercantilebarristers.com; or by telephone on 0203 034 0077 and we would be happy to assist.
Derivative Action
Pursuant to sections 171-177 of the Companies Act 2006, claims may be made against directors if they breach their fiduciary duties to shareholders pursuant to contract and generally under common law to act legally, honestly and in good faith and statutory duties.
Depending on the breach, the court may order the director to account for profits; pay damages; return company property held by the director; or set aside a transaction. A breach of duty may also be grounds for the termination of a director’s employment/service contract, or for disqualification as a director under the Company Directors Disqualification Act 1986.
If you require legal advice on derivative actions contact our Commercial Litigation barristers today by filling in our Enquiry Form; emailing us at enquiries@mercantilebarristers.com; or by telephone on 0203 034 0077 and we would be happy to assist.
Contractual claim
If a shareholder causes a loss by failing to comply with their contractual obligations or breaches agreed restrictions such as non-compete clauses, then fellow shareholders may bring proceedings against the shareholder in breach.
Regardless of the cause of shareholder dispute, it is imperative that shareholder disputes are dealt with as soon as reasonably practicable, as they can be costly and time-consuming, resulting in adjudication; arbitration; or litigation and damage a company’s business relationships and reputation.
If you require legal advice on shareholder contractual claims contact our Commercial Litigation barristers today by filling in our Enquiry Form; emailing us at enquiries@mercantilebarristers.com; or by telephone on 0203 034 0077 and we would be happy to assist.
Winding up petitions
A winding up petition precedes the liquidation of a company and its function is to ask the Court to wind up, or dissolve, the company and have an insolvency practitioner recover the company’s assets so that they can be sold and the proceeds distributed to the creditor.
Shareholders may petition for the winding up of the company on a ‘just and equitable’ basis, where:
- There is deadlock between shareholders when making decisions. If there has been a complete breakdown in the relationship between shareholders to the extent that decisions about the company’s business cannot be reached, then the court may be asked to intervene to end the company.
- The original purposes of the company have been achieved or may no longer be pursued
- There has been serious mismanagement of the company by the directors, such that the company has suffered losses and the shareholders can no longer continue
If you require legal advice on ‘just and equitable’ winding up contact our Commercial Litigation barristers today by filling in our Enquiry Form; emailing us at enquiries@mercantilebarristers.com; or by telephone on 0203 034 0077 and we would be happy to assist.
Mercantile Barristers have expertise in providing advice and representation in shareholder disputes claims to clients, whether they are businesses or individuals; or shareholder disputes solicitors. We have particular experience in advising clients on the extent of shareholder duties; shareholder agreements and an array of shareholder disputes. We also have experience in taking instructions from shareholder disputes solicitors representing their clients in shareholder dispute proceedings concerning before the county court; Insolvency and Companies List in the King’s Bench Division; Court of Appeal and Supreme Court.
If you require advice contact our Commercial Litigation barristers today by filling in our Enquiry Form; emailing us at enquiries@mercantilebarristers.com; or by telephone on 0203 034 0077 and we would be happy to assist.
How Our Process Works
You can call, email, or fill out an enquiry form to tell us about your case. One of our specialist clerks will speak with you to make the arrangements to advance your case.
Our specialist clerk will match you with the barrister with the expertise to deal with all aspects of your case. They will also obtain and organise the papers the barrister will have to consider in your case.
Our clerk will agree the fee for your consultation with the barrister beforehand. The clerk will then arrange a convenient time for you to have the consultation by video call, telephone or in person.
In the consultation the barrister will assess your legal position, devise a legal strategy, and give you appropriate advice on the necessary next steps to achieve your objective.
Fill in the form below and one of our specialist clerks will get in touch.
