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Boardroom and shareholder disputes

It is an unfortunate reality that business relationships often fail to work out, which can lead to a dispute between shareholders. When a boardroom and shareholder dispute arises, it is important to find a swift and effective resolution to prevent any further disruptions to your business’s operations.

At Stephen Rimmer, our highly experienced boardroom and shareholder dispute solicitors have built up substantial experience and expertise in handling boardroom and shareholder disputes, having previously worked with a wide range of businesses in Eastbourne, Hastings and across East Sussex.

Using our skills with efficient dispute resolution, we can help your business to achieve a positive outcome for your situation and in the right way for your commercial objectives, both in the short- and long-term.

How we can help with boardroom and shareholder disputes

Dealing with a shareholder or boardroom dispute is something no business wants to handle. However, given that these disputes can arise for a wide variety of reasons, it is important to have experienced solicitors on your side who can help you achieve an amicable solution that reduces the potential for any unwanted disruption to your commercial endeavours.

We can support you with the processes involved in shareholder dispute resolution, seeking to negotiate an amicable agreement wherever possible. Depending on the circumstances, this may include engaging in negotiation and alternative dispute resolution or court proceedings where necessary.

Consult our boardroom and shareholder disputes solicitors in Eastbourne and Hastings

For clear, expert boardroom and shareholder dispute advice, please contact a member of our commercial litigation team for a no obligation discussion:

For more information on our services, see our commercial litigation page.

Types of boardroom and shareholder disputes

There are a wide range of different types of boardroom and shareholder disputes that can arise during the course of business. While the exact circumstances relating to such a dispute will vary depending on several factors, typical boardroom and shareholder disputes are likely to relate to:

  • Breaches of shareholder agreements
  • Enforcing the terms of a shareholder agreement
  • Removing shareholders
  • Directors’ duties
  • Restrictive covenants
  • Breaches of fiduciary duties
  • Winding up proceedings
  • Insolvency
  • Unfair prejudice claims
  • Derivative claims
  • Restructuring
  • Exit and retirement

Actions against you as a director

As a director, you have several duties towards the company. Where these duties are not upheld or have been directly breached, the company may be entitled to enforce them and take action. This could potentially lead to disqualification from acting as a director.

Legal action could include:

  • Seeking an injunction
  • Issuing a claim for damages
  • Seeking an order for restoration of the company’s property
  • Seeking an order for a director to account for profits

Contracts entered into by a director that are directly linked to the breach can also be rescinded.

How to protect yourself in a boardroom or shareholder dispute

There are several effective methods of protecting yourself against disruptive boardroom and shareholder disputes. The most effective way of catering for such disputes well in advance is to provide for such scenarios in your articles of association and/or shareholders agreement.

These agreements will set out what processes need to be followed in the event of a shareholder or boardroom dispute, which can help everyone involved to better understand their position and what action needs to be taken to ensure that a positive resolution is found.

In addition, an agreement should also anticipate any potential future issues. These might include provisions for what will happen if the company needs to raise additional financing, enter into high value contracts or engage a large number of new employees.

What decisions require shareholder approval?

Any Articles of Association, as well as any shareholders’ agreements, that are in place, will dictate which decisions taken by a director will require shareholder approval. In addition to this, there are certain decisions which will always require shareholder approval by law.

When addressing this matter, it is essential to consult the terms of the articles and shareholder agreements to establish whether shareholder approval is required.

The most common decisions which are likely to require shareholder approval include:

  • Making changes to articles of association
  • Granting authority to issue new shares
  • Making changes to company name
  • Removing a director

What is likely to cause a boardroom or shareholder dispute?

There are plenty of potential reasons why a boardroom or shareholder dispute may arise. This includes situations where:

  • There are disagreements over general strategy for the business
  • There are breakdowns in personal relationships
  • Conflicts of interest arise
  • There are financial concerns
  • There is a change in the personal circumstances of a board member

Do shareholders have the power to dismiss a director?

Technically, shareholders will have the power to dismiss a director, but there are very complex procedures and policies which can make this a difficult process.

Shareholders representing at least 5% of the company’s voting rights can require the board to call a general meeting of the shareholders to consider a resolution to dismiss a director. For this to be effective, the resolution must be passed at the meeting by more than 50% of the votes cast.

The director in question will be entitled to receive special notice of the meeting and present their case.

The Companies Act 2006 outlines that a director can be removed in this way, irrespective of anything contained in their contract of employment or in the company’s Articles of Association. Directors who are also shareholders may have special voting rights on resolutions to remove them.

Can the board of directors dismiss a director?

Shareholder approval is required to dismiss a director from a company. If said director is also an employee of the company, the board of directors will be required to ensure that the dismissal process respects their employment rights. This is especially important with regards to issues such as their notice period as specified in their contract and their right not to be ‘unfairly dismissed’.

Where an agreement is made for a director to leave a company (rather than them being directly dismissed), a compromise agreement will often be drawn up, which will cover any future claims and the departing director’s involvement in future businesses.

Our boardroom and shareholders dispute solicitors’ fees

At Stephen Rimmer, our boardroom and share are committed to complete transparency with our legal fees. Whenever instructed, we will always be forthright with the expected costs involved in your matter.

Some of our services can be charged on a fixed fee basis. However, where more complicated work is concerned, our fees will be based on the level of legal expertise and whether ongoing support is required to reach the desired outcome.

Speak to our boardroom and shareholder disputes solicitors in Eastbourne and Hastings

From our offices in Eastbourne and Hastings, our team advises businesses all across East Sussex, including in Bexhill-on-Sea, Hailsham, Polegate, Battle, Pevensey and St Leonards-on-Sea.

To find out how we can help with boardroom and shareholder disputes for businesses, please contact our expert team now:

How can we help you?

Call us today on 01323 644222 to get the specialist help you need.