Legal AdviceRunning A Business

Shareholder Disputes can Lead to Protracted Court Battles

Shareholder Disputes

Early Valuations can put you in an Empowered Position

Shareholder disputes are more common than we like to think and often prove disruptive to a business; in fact, it would be fair to suggest that a serious dispute can bring a successful business to its knees. Expert commercial lawyers can help perform early valuations and this helps pave the way for quick and efficient resolutions. Independent valuations of your shareholdings can strengthen bargaining power and there is higher likelihood of getting what you deserve. There can be several circumstances that can lead to a shareholders dispute. Differences of opinion may arise between the parties involved and the dispute could involve:

  • Shareholders and directors of unlisted companies
  • Shareholders and directors of proprietary limited companies
  • Partners in a business partnership or trust
  • Conflict between controllers of a business entity regarding management, finance, operation or other issues

At the core of any shareholders’ dispute is usually a struggle for control as well as the resultant benefits that can be expected from the control. Shareholder disputes may arise due to relationships gone sour, differences of opinion regarding succession, operation, finance or families could be mired in a dispute for future control of the business. At times, when shareholders fall out, they may complain of unprofessional handling of company affairs or even allege fraud. In such cases, it’s always better to seek efficient legal services in order to explore methodical and systematic solutions to legal problems.

In many cases, shareholder disputes may involve a minority shareholder who may feel that he or she has been mistreated or disagrees with decisions made by major shareholders. There are times when such conflicts can get out of hand and become too complex to resolve; the implications usually involve steep legal costs and stressful litigation that invariably affects business performance. Early legal guidance can help resolve issues in a more synergetic manner. Time-consuming litigation often proves to be a distraction and has a debilitating effect on business value and reputation. A business that suffers from the effects of shareholder disputes may also find it difficult to obtain financing from lending institutions.

The resolution of such issues depends on the facts involved and the legal provisions that apply to those facts. The process may involve examination of all the documents involved in order to obtain clarity on rights and obligations. Peaceful and speedy resolution of contentious issues can help minimise negative effects on business and reduce stress for all the concerned parties. Independent, legal and non-biased share evaluations often help in expediting solutions and resolving shareholder disputes. Seasoned legal experts will take into account several aspects that are common to shareholder disputes and will be happy to leverage their experience for your benefit.

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