How to resolve shareholder disputes

On Behalf of | Nov 10, 2023 | Business Law

You and your shareholders want the best for the company, but that doesn’t mean you’re always on the same page. Whilst you agree that you want to see the company expand, you may not have a consensus on how to get there.

Shareholder disputes can arise for numerous reasons, and they have the potential to be very damaging to a company. Outlined below are a few things to keep in mind when trying to resolve a shareholder dispute.

Start with your legal standpoint

Even if you don’t intend to take legal action, you still need to know exactly where you stand. It’s best for all parties to do this.

The rights and obligations of all shareholders should be outlined in the shareholders’ agreement. A watertight shareholders’ agreement should explain each shareholder’s position in terms of ownership and sale of shares as well as dispute resolution methods.

Try to negotiate

While some parties may be very frustrated about the situation, it’s rare for an aggressive approach to work out. Instantly pursuing litigation without first trying to mediate could result in the dispute becoming worse.

Try to get everyone around the negotiating table. While this can still be a formal negotiation with representation, it doesn’t need to have the harsh feel of a courtroom.

Consider exit strategies

Unfortunately, some disputes cannot be resolved. A shareholder may need to find a way out. It may be possible for you to buy the shareholder out, but you want to make sure you get a fair price and legal protections when doing so.

Settling a shareholder dispute can be tricky, but it’s not impossible. The earlier you seek legal guidance, the more likely you are to find an effective solution.


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