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Phillip Baldwin

Dispute resolution

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Annabel Barons

Dispute resolution

Shareholder disputes are a significant concern that can affect the operation, valuation, and reputation of a business. These conflicts often arise due to disagreements among shareholders or between shareholders and the company's management, leading to a complex web of legal, financial, and interpersonal issues. Understanding the nature of these disputes, their common causes, and the legal framework governing them is crucial for shareholders and company officers alike.


Nature of shareholder disputes

Shareholder disputes in England and Wales can vary widely in their nature and scope. They can range from disagreements over strategic direction, dividend policies, and management practices to allegations of unfair treatment, breach of fiduciary duties, and conflicts of interest. The complexity of these disputes often lies in the relationship between company law, contractual agreements, and the principles of equity and fairness that underpin the legal system in England and Wales.


Common causes of shareholder disputes

  • Breach of Shareholder Agreements: Disputes may arise when parties believe that the terms of a shareholder agreement, such as those governing the sale of shares or the operation of the business, have been breached.
  • Management Disagreements: Differences in opinion on how the company should be run, including disputes over business strategy, investment decisions, and allocation of profits, can lead to conflicts among shareholders or between shareholders and directors.
  • Minority Shareholder Unfair Prejudice: Minority shareholders may feel that their rights are being ignored or abused by the majority, leading to disputes over issues like dividend policies, appointment of directors, and access to information.
  • Breach of Directors' Duties: Shareholders may initiate disputes if they believe that directors have breached their fiduciary duties, such as the duty to act in the best interests of the company, or have engaged in misconduct.


Legal framework and remedies

The legal framework for addressing shareholder disputes in England and Wales is primarily governed by the Companies Act 2006, along with common law principles and the specific articles of association of a company. Key remedies available to shareholders include:

  • Derivative Claims: A shareholder may bring a claim on behalf of the company against a director for breach of duty, negligence, or other wrongs. This mechanism allows the recovery of damages or losses suffered by the company directly from those responsible.
  • Unfair Prejudice Remedies: Under Section 994 of the Companies Act 2006, shareholders can seek relief if the company's affairs are being conducted in a manner that is unfairly prejudicial to the interests of shareholders generally or of one or more shareholders, including minority shareholders.
  • Just and Equitable Winding Up: In extreme cases, shareholders can petition for the company to be wound up on just and equitable grounds, although this is a remedy of last resort.


Mitigating shareholder disputes

To mitigate the risk of disputes, companies in England and Wales should:

  • Ensure clear, comprehensive shareholder agreements and articles of association are in place.
  • Maintain transparent and open communication with all shareholders.
  • Implement fair and equitable management practices, especially in regards to minority shareholders.
  • Regularly review and update corporate governance policies to reflect best practices and legal requirements.



The legal framework provides various mechanisms for resolution, but the emphasis should always be on prevention and early resolution. Shareholder disputes can not only be expensive in respect of legal fees, they could damage the reputation and value of the company. It is very difficult to predict what an aggrieved shareholder will receive financially so companies and shareholders alike should seek to foster a culture of transparency, fairness, and mutual respect with a view to minimising the risk of disputes and ensuring the long-term success of the company.


How our dispute solicitors can help

Boyes Turner are highly experienced in acting for shareholders and directors to advise on and resolve boardroom and business ownership disputes, whether through early stage negotiation or ultimately litigation. The Dispute Resolution team works alongside the firm's Corporate team to ensure that you obtain the most favourable resolution in order to meet your objective.

For more information please or if you wish to speak to a member of the team concerning a shareholder or company dispute, please contact our Dispute Resolution team.

Consistent with our policy when giving comment and advice on a non-specific basis, we cannot assume legal responsibility for the accuracy of any particular statement. In the case of specific problems we recommend that professional advice be sought.

Get in touch

If you have any questions relating to this article or have any legal disputes you would like to discuss, please contact the Dispute Resolution team

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