Shareholder Dispute Solicitors

The team at Newtons are best positioned to resolve shareholder disputes while protecting your interests.

It is not uncommon for shareholder disputes to occur within a company. When they do, they can be stressful for the individuals involved, and have both financial and reputational consequences for the business. At Newtons, our experienced shareholder dispute lawyers can help to resolve conflict among company shareholders while protecting your interests.

We have experience in resolving many different types of commercial disputes, and acting on behalf of both majority and minority shareholders. Our strategic commercial approach will help to resolve the conflict efficiently and effectively.

What is shareholder dispute resolution?

A dispute between shareholders usually arises due to a breakdown in trust, communication or the belief that the interests of the shareholders are no longer aligned.

Often, it is possible to head off disputes at the outset, by ensuring you have the right foundations in place. A well-drafted shareholders’ agreement will often be helpful in avoiding disputes arising, but they are not always put in place.

The most common reasons we hear for not putting a shareholders’ agreement in place are:

• The parties having understandably wanted to minimise costs when starting out; and
• The parties believing that their relationship was future-proof, and that they would be able to resolve any issues that arose amicably.

Sadly, all too often, we see this decision come back to bite clients at a later date and, when a dispute arises between business owners, it can be difficult, stressful, and very expensive for all concerned.

What is a shareholders’ agreement?

A shareholders’ agreement is a private contract between a company’s shareholders. Unlike Articles of Association, a shareholders’ agreement is an optional document for a company, but we strongly recommend that all companies have them in place.

A shareholders’ agreement is a bespoke document, the contents of which will depend on the needs and circumstances of the shareholders, and the company. However, as a general rule, they usually contain provisions relating to ownership and transfer of shares, the distribution of profits and losses, and the management and control of the company. Most importantly, a shareholders’ agreement can address potentially contentious issues at the outset, which plays a significant role in avoiding costly disputes further down the line.

Another key benefit of a shareholders’ agreement is that, unlike Articles of Association, they are not generally open to public inspection. So, if there are certain matters which shareholders wish to ensure are enshrined in a contractual document, but which they with to remain private, then a shareholders’ agreement is the place to record such terms.  

How can a shareholders’ agreement help avoid shareholder disputes?

There are two key ways in which shareholders’ agreements tend to help in avoiding shareholder disputes

• Firstly, by forcing shareholders to consider any thorny issues which might arise further down the line, we can sometimes help flush out any potential areas of dispute at the outset. Sometimes, these negotiations lead to the parties creating fair and measured mechanisms (e.g. relating to the valuation of shares on exit) when the parties are on good terms; sometimes, however, it highlights to the parties that they are fundamentally at odds on certain key matters, which enables one or more of the parties to extract themselves at an early stage.
• Secondly, if a dispute does arise, having a clear mechanism in place within a shareholders’ agreement can avoid the need for contentious, protracted negotiations when the parties are no longer on good terms. As an exiting shareholder, if you know that everyone is complying with arrangements which were agreed at the outset and enshrined in a contract, then (even if you wish you were getting a better deal), it is generally easier to accept the terms which were agreed upon when everyone was on good terms, and to approach the exit pragmatically and holistically.

Is it too late to put a shareholders’ agreement in place?

No! You don’t have to put a shareholders’ agreement in place when the company is incorporated so, even if your business has been operating for some time already, it’s never too late. Similarly, if you did put a shareholders’ agreement in place but the business/ownership has changed so that the agreement is no longer fit for purpose, it’s never too late to review and update your agreement. But, the quicker you get the ball rolling, the better.

However, if you haven’t got a shareholders’ agreement in place (or if you have one that isn’t fit for purpose) and a dispute has arisen (or is on the horizon), our shareholder dispute solicitors are ready and willing to look after you.

What type of shareholder disputes can Newtons help with?

We can advise on bringing and defending an extensive range of issues, including:

• Shareholder Agreements: Interpreting your rights and obligations under your shareholders’ agreement. Or, where no such agreement exists, advising on your statutory rights and obligations as a shareholder.
• Unfair Prejudice Petitions: Claims by a minority shareholder where the company’s business is being conducted in a way that is prejudicial to that shareholder. For example, deliberately devaluing the value of the minority’s shareholding or withholding company accounts data from the minority shareholders.
• Company Shares: Disputes relating to the transfer and valuation of shares in a company.
• Dispute Resolution: Representing clients during alternative dispute resolution (ADR)

Our dispute resolution process

At Newtons, our experienced shareholder dispute lawyers swiftly establish the route of the problem, provide efficient and sensible proposals, and work with you to find a quick and amicable resolution, whilst ensuring that you never pursue a course of action where the costs become disproportionate to the value of the dispute.

Protecting our clients’ interests is of paramount importance, so we always endeavour to help you resolve the dispute without it going to Court.

The first course of action is to attempt to resolve the dispute by negotiation or some agreed-upon form of ADR, such as mediation.

Should ADR prove unsuitable, we can provide the necessary guidance and representation in Court action, striving to achieve the best possible outcome for your case.

Newtons’ dispute resolution success

Newtons has assisted in resolving a number of shareholder disputes. For example, we helped our client reach an agreement in a complex, long-running commercial dispute, achieving a multimillion-pound settlement. Read more about this shareholder dispute case study. 

Contact our shareholder dispute solicitors

Whether you are bringing or defending a shareholder dispute, Newtons is here to help you navigate the legal complexities while establishing a strategic and swift resolution that protects your interests.