Disputes between shareholders of a company are more common than many would believe as the interests of shareholders change over time and conflicts can arise.

The reason for a dispute will vary depending on the business but can typically occur due to a difference of opinion on how the business is being managed and if this should change, conflict of interest and poor relationships.

What could help?

Including a section to anticipate any disputes within your shareholder’s agreement will help save you time and money when one does arise.

A shareholders agreement sets out the agreement between the shareholders and determines how the business will be run and what to do in the event of certain issues springing up.

Shareholder agreements are regulated by contract law and can be amended or dissolved by an agreement. As it is a private document, it does not have to be made public or registered with Companies House.

Having a shareholder agreement will give you clarity over how to deal with any disputes that arise.

Consider mediation

When there is a dispute between shareholders, one option to consider is mediation, with a neutral individual who can eliminate any bad feelings during meetings and try to come to a resolution.

What if that doesn’t work?

After mediation, if an agreement cannot be reached then generally you can consider having the shareholder causing a dispute bought out by the other shareholders or if there are two involved then they can offer to buy the other out and whoever offers the higher price can do so.

For more information on dealing with disputes between shareholders, get in touch.