Running a business isn't always easy and disputes can often arise between shareholders of a company or between partners in a partnership. A well drafted shareholder agreement or partnership agreement will go long way in avoiding conflict by clearly setting out the rights of shareholders or partners so they know where they stand. But what happens when the terms of these agreements are breached or do not cover the particular circumstances of the dispute? We can help by asserting your rights and proposing commercially focused solutions in settlement negotiations, or by assisting in bringing or defending claims to enforce rights set out in such agreements and/or statutory rights set out in legislation.
Common situations where disputes arise include where management:
- seriously fail in their management duties;
- give themselves excessive remuneration or benefits;
- exclude others from management when they can legitimately expect to be included;
- fail to provide information;
- divert business for personal gain; and
- make secret profits from transactions.
If court action is required, shareholders may seek remedies by:
- suing for damages or seeking an injunction to force certain conduct under their shareholder agreement;
- presenting an unfair prejudice petition under section 994 of the Companies Act 2006 for an order for the purchase or sale of shares or an order regulating the conduct of the company's affairs;
- bringing a derivative claim in the name of the company against a director or third party under section 260 of the Companies Act 2006 based on the negligence, default, breach of duty and/or breach of trust by a director; or by
- presenting a petition for the winding up of the company where this can be shown to be just and equitable under section 122(1)(g) of the Insolvency Act 1986.
Similarly, partners may take court action to:
- enforce their rights under their partnership agreement; or
- dissolve their partnership under the Partnership Act 1890.