How can shareholder disagreements be resolved?
If a company has articles of association and a shareholders’ agreement, these provide the starting point for resolving a dispute. For example, there may be an agreed set of procedures that can be followed to manage the transfer of shares.
Disputes can be resolved through mediation. This is when an independent mediator helps the parties involved to reach an agreement themselves. If an agreement is reached, the terms can be incorporated into a legally binding settlement agreement or a waiver of claims.
A share purchase agreement can also be drawn up.
Settling disputes through mediation is faster and less costly than court action, which should always be a last resort. However, if court action is necessary, we have the experience to act in your best interests.
What are the solutions to shareholder disputes?
When shareholder disputes arise, there are different solutions, including:
- Buying back shares – The company buys back shares from the shareholder, increasing the stakes for the remaining shareholders, which can only usually happen if the majority of shareholders agree.
- Dividing the company – The business is split or reorganised so shareholders can go their separate ways.
- Deferred consideration – The company may agree to buy shares back from the shareholder at a fixed price but defer payment until there are funds available.
- Variation of rights – This enables a shareholder to keep receiving an income from the company but to relinquish management control.