By Kumaran Sivathillainathan, Senior Associate Solicitor – Commercial Litigation, Vyman Solicitors

In business, not all relationships last forever.

We regularly advise shareholders and directors who suddenly find themselves at odds – sometimes with family, sometimes with long-time business partners – facing exclusion, mistrust or the mismanagement of what they helped build.

These disputes don’t just damage relationships. They can destabilise the business, freeze decision-making, and in some cases, wipe out significant value.

At Vyman Solicitors, we help clients take back control – strategically and decisively.

Why Do Shareholder and Director Disputes Arise?

Even in successful companies, disputes can erupt when:

• A director is sidelined from key decisions
• Company funds are used improperly
• Dividends are withheld
• The business strategy becomes contested
• There’s no shareholder agreement in place

Tensions escalate quickly, especially in family-run or fast-growth businesses where governance may be informal or misaligned.

What Are Your Legal Options?

When resolution isn’t possible through discussion, the law offers remedies that protect shareholder and director rights.

Unfair Prejudice Claims

Under section 994 of the Companies Act 2006, shareholders can petition the court where they believe the company’s affairs are being conducted in a way that unfairly harms their interests. This could involve:

• Exclusion from management
• Share dilution
• Misuse of company funds
• Denial of profit share

Remedies may include:

• Forcing the purchase of shares at fair value
• Compensation
• Orders to regulate company conduct

Derivative Claims

If directors have breached their duties, such as self-dealing or diverting funds, shareholders may bring a claim on behalf of the company to pursue recovery.

Just and Equitable Winding-Up

In rare but severe cases, where trust has broken down entirely, a shareholder can apply to have the company wound up by the court.

Case Study: Family Property Partnership Dispute

We represented clients excluded from a longstanding family-run property partnership of 12 siblings. The male partners controlled the assets and denied female spouses and children any share of profits, claiming the business wasn’t even a partnership.

After a three-week High Court trial, the judge confirmed the existence of the partnership and awarded our clients their rightful share of the assets. The appeal was dismissed by the Court of Appeal in under 30 minutes.

Why Timing (and Strategy) Matters

Many clients wait too long – once trust has broken, or money has disappeared.

We work with shareholders and directors early to:

• Secure urgent relief (e.g., injunctions or asset protection)
• Build negotiation leverage
• Pursue litigation only when it’s the best route

Whether you’re seeking a clean exit or preparing to assert your rights, we bring legal precision and commercial insight to every dispute.

FAQs

What is unfair prejudice?

It’s when the company’s conduct harms a shareholder’s interests in a way that’s unjust. UK law offers a remedy under s.994 Companies Act 2006.

Can I sue a co-director for breach of duty?

Yes – directors must act in good faith, avoid conflicts, and promote the company’s success. Breaches are actionable.

What if there’s no shareholder agreement?

You may still have rights, especially in family-run or quasi-partnership businesses. Early legal advice is essential.

Take the First Step

Director or shareholder disputes don’t have to destroy what you’ve built. With the right legal team, you can protect your interests, recover what’s owed and move forward on your terms.

Contact our legal team now!

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About Vyman Solicitors

Located in North West London, Vyman Solicitors provides a comprehensive range of legal services, including Corporate & Commercial Property Law, Litigation, Residential and Conveyancing Law, Family Law, Private Client and Immigration. Known for its commitment to personalised client support and legal excellence, Vyman is a trusted partner for businesses and individuals alike.

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Disclaimer: This article is for informational purposes only and does not constitute legal advice.