Shareholder disputes can cause many issues for a company and for shareholders. It can cause disruptions in work and potentially cause the company reputation to come into disrepute.
The disputes need to be resolved quickly and efficiently to minimise any disruptions. There are a variety of disputes that can arise, such as:
- Shareholder claims/disputes
- Unfair prejudice petitions
- Breaches of shareholder agreements
- Breaches of director's duties
- Derivative actions
- Fraud related disputes against directors or shareholders
- Injunctions
- Insolvency/Winding up petitions
Shareholders should enter into a shareholders' agreement when purchasing shares. This can clarify all rights for the shareholders' and discuss how issues should be dealt with, if an issue arises. Without a shareholder agreement, issues are much more likely to happen.
It is important to remember that shareholders do not manage the company or control the activities of a company. A board of directors is appointed to control the activities of a company. Shareholders are also not liable for the company's debts or other financial obligations.
Shareholder disputes can be dealt with in numerous ways, depending on who is involved and what the dispute is about.
Every shareholder dispute is different, and can be dealt with in different ways such: litigation in courts, shareholder agreements, negotiations and mediation.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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