What are the most common types of shareholder disputes?
There are many reasons for shareholder disagreements. Here are some examples:
Directors act in breach of an agreement
If a director breaches the terms set out in a shareholder agreement or articles of association this can lead to a dispute.
Lack of communication with minority shareholders
Every shareholder in a company has the right to be informed about the business's financial affairs. Disputes may arise when majority shareholders make decisions without discussing them with minority shareholders (those who own less than 50% of a company).
Shareholders fall out
When shareholders are locked in a disagreement over a specific issue, or there is a clash of personalities, relationships can break down completely. Until matters are settled, it can be very difficult for those involved to run a business properly.
If one shareholder is drawing more money from the business than the other shareholders, then this can lead to a dispute. For instance, the largest shareholder might draw a higher proportion of dividends from the business than the other shareholders think is fair.
A dispute might also arise if a shareholder diverts clients towards another business that they own or control.