Services > Dispute Resolution > Shareholder disputes

Shareholder Disputes

Company Directors have day to day control of the company, but the shareholders hold the ultimate power. Shareholders can dismiss and appoint new Directors to the Board, subject to any restrictions in the Company’s Articles or in a Shareholders’ Agreement.

 

SHareholder Disputes

Rights & Remedies

By taking control of the Board of Directors, shareholders can force the company to take certain action, for example, pursuing a director for some wrongdoing. However, this ultimate power does not assist a minority shareholder (who has a shareholding of 49% or less). A minority shareholder must rely upon other rights and remedies if the majority shareholders are in control of the company via the directors. These rights and remedies may be:

The right to inspect company registers and to require the company to call general meetings.

The right to enforce rights conferred by the Articles – for example where the directors act or propose to act contrary to the Articles of the Company.

The right to object to an improper alteration of the Articles.

The right to bring an action to prevent a transaction that is outside the power of the company or its directors.

SHAREHOLDER DISPUTES

Actions upon Disagreement

If there is a Shareholders’ Agreement in place, the shareholder may also have enforceable remedies against the signatories of the agreement in the same way as any other contract. If the dispute cannot be settled, a disgruntled minority shareholder can:

Consider whether they can bring a claim on behalf of the company, or

Rely upon the statutory protection available to minority shareholders and petition the court for an order that the company is wound up.