EM Law are experts in advising on shareholder disputes. Our lead shareholder disputes lawyer is Joanna McKenzie who has extensive experience in advising clients on a wide range of dispute resolution matters.
Shareholder disputes can arise from a variety of situations. Both majority and minority shareholders can threaten or bring disruptive legal action, either personally or on behalf of the company.
The rights conferred upon shareholders can vary widely between companies. Shareholder rights can depend, for example, upon which class of shares they hold. The rights, duties, obligations and responsibilities of shareholders are contained within the articles of association. Every company must have articles of association. The articles form the basis of a statutory contract between the members, and between each member and the company.
In addition to the articles of association, the shareholders in a company often sign up to a shareholders agreement. A shareholders agreement also governs the relationship between the shareholders in a company and supplements the company’s articles of association. Ideally, the articles and the agreement will anticipate and provide for shareholder disputes.
Some of the most typical shareholders disputes that shareholders might bring include:
• Claims for unfair prejudice
A member of a company may petition for relief against unfair prejudice under section 994 of the Companies Act. The Companies Act states that:
A member of a company may petition for unfair prejudice where:
– the affairs of the company are being conducted in a manner that is unfairly prejudicial to the member’s interests as a member; or
– an actual or proposed act or omission of the company is or would be so prejudicial.
Although what amounts to unfair in each case is subject to interpretation, unfair prejudice actions are generally based on a failure to fulfil the legitimate expectations of the aggrieved shareholder. A shareholder may, for example, expect the company to carry on a particular business or to have an equal say in how the company is managed and this may not happen.
• Petition for the winding up of the company
If a shareholder considers that a company is being mismanaged or a deadlock has arisen, a shareholder can present a petition under section 122(1)(g) of the Insolvency Act 1986. The court then has the power to wind a company up, if it is ‘just and equitable’ to do so. It should be noted, however, that even if a case for winding up is clearly established the court may refuse to grant the relief on the basis that there is an alternative remedy and it is unreasonable to the complainant not to pursue that remedy. As a shareholder, you should therefore look to other options first.
• Derivative claim
A statutory derivative claim may be brought by shareholders of a company under Part 11 of the Companies Act 2006. A statutory derivative claim is brought in the name of the company and therefore any proceeds of any claim will belong to the company rather than to the individual shareholder. There is no minimum number of shares that must be held to bring a derivative action but the court will look at the size of the shareholding in deciding whether or not to exercise its discretion to permit a derivative claim to be maintained.
Resolving shareholder disputes
Quite often, even if a shareholder brings a claim, the matter can be resolved before it gets to the courts. Informal routes to resolving problems should always be explored first. These routes include calling an informal meeting, calling a general meeting or going through a negotiation or mediation process. Ideally, a solution can be reached which enables the aggrieved shareholder to stay with the company. In the event of such disputes, formal legal advice should be sought at the earliest opportunity.
For any questions you may have concerning shareholder disputes contact Joanna McKenzie.
"Neil and his team have undertaken several items of legal work covering contracts, agreements and share option schemes for IMC Worldwide... View More Testimonials"
Gavin English MD IMC Worldwide Ltd
"Neil at EM Law advised us with regards to GDPR. He was thoughtful and thorough.... View More Testimonials"
COO of a Strategic Communications Agency
"I want to thank Neil at Emerging Law for his support and guidance whilst I have been setting up my own business. He has talked me through the step by step stages and legalities involved so that I can make informed decisions about my business approach... View More Testimonials"
Ayshen Ali founder Attainers Limited
"I felt incredibly fortunate to have come across Imogen. She was fantastic at helping at every juncture... View More Testimonials"
SM, Recruitment Manager
"Neil and Lauren were both very helpful in drafting contracts I needed for my firm... View More Testimonials"
Alex Mosley, Director Perrygate Property Limited
"Neil and Helen provided us with an employment contract and terms and conditions of business. We found Neil and Helen to be extremely informative and helpful throughout the process... View More Testimonials"
Grant Lambert MD Honor Search (Digital Recruitment)
"Neil Williamson, I cannot thank enough for his work and legal advice, which had brought the great result.... View More Testimonials"
"Neil was brilliant, patient and thorough guiding me through queries setting up my business to be compliant.... View More Testimonials"
Kate York, Photographer
"Neil and I worked alongside each other for several years securing software business overseas for Crown Agents... View More Testimonials"
Nick Small Director Nick Small Consulting
"What can I say about Imogen? She was the shining star in what was a very difficult time for me.... View More Testimonials"
VR, Nutritional Chef and Culinary Manager
"Imogen....has a very personable approach and is succinct in her communication. I would highly recommend her... View More Testimonials"
KE, Development Manager
"Imogen has always given me sound, objective and carefully considered legal advice.... View More Testimonials"
MB, Senior Sponsorship Manager
"Thank you for all your help with the matters regarding my company, you have been thorough in all aspects to the finer detail... View More Testimonials"
John Taylor Director Glo-bell London Ltd
"Neil is able to address complex issues, give us advice that we can follow and come up with creative solutions... View More Testimonials"
Ismet Yucetas CEO Middle East Air Drilling Services
"Imogen is a fantastic employment lawyer. Clear, supportive and very skilled in her area.... View More Testimonials"
LC, Director at a Management Consultancy
"Neil helped us structure, negotiate and put in place our first client software-as-a-service contracts. His technical and commercial advice was invaluable - he understands exactly where we are coming from... View More Testimonials"
Lena Rosenior CEO De Graft Management Ltd
"Cardno has worked closely with EM Law since 2013. The advice and support provided to our business by EM Law has been of a high quality, relevant to our requirements and more importantly helped us to make the appropriate decisions that have contributed to the success of our business... View More Testimonials"
George Mukkath Managing Director Cardno Emerging Markets (UK) Ltd
"We have been working with Neil for many years now, more recently on a retained basis because he has become someone we trust and who understands our business requirements. ... View More Testimonials"
Rupert Wood CEO Wasteland Ski Ltd
"We have worked with Neil and his colleagues on a number of different company issues including business acquisitions, client contract and employment matters... View More Testimonials"
Dave Dadds CEO DRD Communications Ltd
"Starting a new venture, within a new country......I needed someone who could understand the complexities and culture of the venture...... View More Testimonials"
Maren Koros CEO Afyacore
"EM Law have supported Anexsys with a number of legal issues, ranging from drafting complex IT contracts to developing conflict policies and advising on a range of complex multi-jurisdiction legal issues... View More Testimonials"
Rob Crowley MD Anexsys Ltd
Can We Help You?
We are here to help with any of your questions.
Just click "Yes" below.
Please enter your question below
Please enter your name and email address so than we can send you a response
Thank you for sending us your question. We will contact you shortly to discuss this.
Sorry, there is a technical issue. Please contact us by telephone: 0203 637 6374