The success of any company will depend to a large degree on the contributions made by its Directors and Shareholders, with Directors providing the strategic management and operational skill and Shareholders the investment.
A Director may also be a Shareholder. Directors, however, have statutory responsibilities not only to the shareholders, but also to all creditors of the company, while Shareholders interests may principally focus on the interests of the company. Usually the interests and duties of Directors and Shareholders are aligned, but sometimes they come into conflict. It is essential for Directors to understand the extent of their responsibilities, and limits of their authority.
We will advise on all aspects related to the governance and operation of a company, the duties of directors, the rights of shareholders and the responsibilities to creditors.
Even in the best run businesses tensions can arise between Directors at Board level or between Shareholders and some or all Directors. These tensions may be aggravated in difficult economic times, or if there are diverging views about the best interests of the company.
It is not uncommon for problems to arise because lines of authority and responsibility are not clearly defined. We can advise in relation to drafting Directors Service Contracts and Shareholders’ Agreements to assist in reducing the scope for disputes.
When a dispute arises, whether between:
- Director & director
- A director and the rest of the board
- Shareholders and the board of directors
- Shareholders generally
- A minority shareholder and a majority shareholder
or any variant of the above, we can advise you in regard to:
- Negotiations to resolve the dispute
- Alternative dispute resolution, including mediation
- Options available through the courts
The options available through the courts might include actions to deal with
- Confirmation, or otherwise, of board decisions
- Shareholder meetings
- Enforcement of covenants
- Injunctions to restrain misuse of confidential information
- Unfair prejudice petitions
- Acquisition or sale of a shareholder’s interest
- Derivative actions
Our approach is always to first of all aim to understand the needs of our client and the business, and then to identify a course of action which is best designed to deliver a satisfactory outcome. Once it becomes clear that our client’s needs are best served by taking prompt action we will have no hesitation in issuing proceedings and taking those proceedings through to judgment be it in the High Court or elsewhere.
As always, it is best to discuss any potential or actual dispute with us at the earliest possible stage so that we can give guidance and aim to minimise the disruption and damage the dispute may cause to the business.