Shareholder and partnership disputes are a complex area of law that can arise within private companies for a variety of reasons. Shareholder disputes can become a serious issue as they will have a severe impact on the company and therefore its shareholders.
Shareholder disputes solicitors know that the initial task at hand will be to identify the terms of the shareholders’ agreement. Often, the parties will have taken legal advice at the outset of their business relationship and had a shareholders’ agreement or joint venture agreement drawn up. It is not always this straightforward, however. Shareholder disputes often arise when the parties have commenced their venture together on a “handshake” basis.
Where friends or family are concerned, or in the case of a successful start-up business with humble beginnings, there may be no written agreement, meaning the parties’ rights and obligations are not conveniently set out in one place. This usually requires piecing together the terms of the agreement from past conversations and written communications. It can seem difficult, but it is an essential task that litigation solicitors should look to perform with precision.
Types of Shareholder Disputes
At South Bank Legal, our shareholder dispute solicitors have expertise in disputes involving issues such as:
- 50/50 shareholder deadlocks– often arising where no written shareholders’ agreement exists, the minority shareholders cannot agree on how to take the company forward, and no shareholder has the majority vote required to make key decisions. Communications between the parties have often broken down in these situations. Our partnership disputes solicitors have negotiated amicable resolutions to the most difficult of 50/50 deadlock cases.
- Unfair prejudice claims– notwithstanding the existence of a shareholders’ agreement, majority shareholders can obtain statutory remedies under Part 30 of the Companies Act 2006, where the company’s affairs have been conducted in a manner that is unfairly prejudicial to the interests of shareholders. Unfair prejudice petitions are common, and courts have the power to order that an affected shareholder be bought out by the limited companylimited company: in company law, a corporation or incorporat... or the other shareholders.
- Disagreements as to funding– sometimes, a venture will require further capital contributions from the shareholders or individual partners. Disputes can arise where there is no clear agreement as to how the venture will be funded beyond initial capital contributions. Funding stalemates can destroy the value of a venture if they are not resolved efficiently.
- Partnership disputes – partners are liable financially for the business partnership; therefore, a third party can make a claim against the individual partners and the partnership itself. Disputes within the partnership can arise when there are disagreements regarding how the partnership is proportioned, when a partner wishes to leave the partnership, or during equitable winding down processes, which could cause issues and complications for the remaining partners and the business.
- Breaches of fiduciary duties – according to UK law, directors of UK companies must act in accordance with their fiduciary duties, statutory responsibilities and loyalty to the company. If these directors duties are not followed, a breach may lead to conflict and could lead to commercial fraudfraud: in the context of commercial dispute resolution (as o... claims or misfeasance claims if not resolved.
If you are currently dealing with any type of partnership or shareholder dispute, please get in touch with one of our shareholder dispute solicitors for expert advice on your case.
Our approach to shareholder disputes
Expertly drafted shareholders’ agreements that are put in place can help to prevent partnership disputes from occurring by regulating the relationships between directors and shareholders. Shareholders’ agreements can also help to resolve disputes if they do arise as they can provide more clarity on the original agreement between the parties involved in the dispute.
LLP members agreements may also be put in place between the members of the limited liability partnershiplimited liability partnership: in business law, a legal enti.... Limited liability partnershiplimited liability partnership: in business law, a legal enti... agreements are legally binding contracts that outline the responsibilities, rights, duties and liability of each member as well as detailing how the partnership will be managed and run. Limited liability member agreements are governed by the default provisions laid out in the Limited Liability Partnerships Act 2000.
Another way of resolving shareholder disputes includes arbitration, mediationmediation: in the context of litigation and dispute resoluti... or an early neutral evaluation of the dispute. These are forms of Alternative Dispute Resolution (ADR) that can be used as methods of resolving legal disputes instead of using Court litigationlitigation: the bringing of a lawsuit or legal claim in cour... proceedings. These methods are more time-efficient and can be better at taking both parties business interests into account whilst being cost effectively appropriate.
If these methods prove to be unsuccessful, our partnership dispute lawyers have the experience needed to guide you through the court proceedings and, when instructed, represent your case in the courtroom. Through working closely with companies and quasi partnerships, we essentially manage different business interests and avoid disputes arising.
How can South Bank Legal assist?
Our shareholder and partnership dispute solicitors handle a range of disputes. In cases large or small, we consider that it is crucial to control the costs of litigation to ensure that perspective is not lost and that legal costs do not grow out of proportion to what is at stake.
Shareholder and business disputes often require subtlety and expertise in order to secure an appropriate way forward. Therefore, it is essential to have a highly experienced shareholder dispute solicitor on your side to assist all parties involved to reach a mutual settlement in a time-effective manner. At South Bank Legal, our shareholder solicitors can provide expert legal advice on how to proceed with your partnership dispute case.
Our UK commercial law firm is authorised and regulated by the solicitors regulation authority, and our partnership dispute lawyers can offer legal services to those located in England and Wales. We have offices located in Central London.
We offer our services on a wide range of commercial issues, such as intellectual property disputes, employment law and contract disputes, and property disputes.
If you are a shareholder or partner in a venture and wish to understand your rights or potential claims, you can contact South Bank Legal via email at info@southbanklegal.com or telephone 0203 1266 584 for a confidential discussion with a shareholder dispute solicitor or our commercial dispute team today.