• MaddoxLegal

In a dispute with your fellow shareholders?

Disputes between shareholders, whether they be majority or minority shareholders, may arise for various reasons. For example, if there is a disagreement over how the company is functioning, grievances over equal treatment between colleagues, or not being privy to information you may well be entitled to. Overall, if you feel that there has been a breach of fiduciary duty by one or more of the company directors (for example, if they have not acted in the best interest of the company) then you should seek early advice in relation to your options going forward. Critically, it is important to understand the various avenues available to resolve such disputes, which can include the following:

A) Negotiation/mediation (Alternative Dispute Resolution) – Both negotiation and mediation present a resolution to disputes that avoid the financial and time costs of court proceedings. If direct negotiations between parties and/or their legal advisors fails to resolve a dispute, mediation through a third party may present a solution to such dispute.

B) Unfair Prejudice Proceedings – Unfair prejudice claims are brought under sections 994 and 996 of the Companies Act 2006. An unfair prejudice claim is often brought against a majority shareholder by a minority shareholder when the latter claims that the affairs of the company are being or have been conducted in such a way that causes unfair prejudice to their interests. Although there is no direct classification of what is considered “unfair” or “prejudicial”, a minority shareholder should always seek legal advice to ensure that their claim would be reasonably considered unfair and that they have enough evidence to file such a claim.

C) Derivative Proceedings – Derivative actions or derivative claims are actions brought by a shareholder on behalf of the company, often relating to a breach of duty against a majority shareholder. Although another shareholder may seek the court’s permission to bring such a claim, the relief sought is on behalf of the company.

D) Purchase of Shares/Structured buy out – When the resolution of a dispute fails to reach an agreeable solution, buying out the disputing shareholder’s position in the company, in accordance with any applicable provisions in any Shareholders Agreement and the Articles of Association, is an option to be considered by the parties.

If you are a shareholder and you are currently involved in a dispute with your fellow shareholders, please do not hesitate to contact me and I would be happy to provide advice tailored to your individual situation. With an extremely successful track record of positive results in relation to shareholder disputes, there is no doubt that I will be able to assist you.

Sarah Chambers is a Senior Associate with a particular expertise in Litigation and Insolvency. To contact her, please email

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