RESOLVING DIRECTOR & SHAREHOLDER DISPUTES
Director & Shareholder Disputes occur in many businesses at some time or another. For a FREE no-obligation chat with our expert litigation solicitors telephone: 02477 981545
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Most director or shareholder disputes can be handled internally, but sometimes where there has been some kind of wrongdoing things can get messy and have a negative impact on the business.
Directors have a duty to the company and its shareholders. Should breaches occur it may be necessary to remove a director. Matters become a little more complicated where directors are also shareholders.
Many directors will not know how to remove another director and what liabilities the company might face in doing so.
In some cases, due to the disruption and instability that can be caused Kumari Hart Solicitors recommend that directors should seek legal advice quickly to avoid disruptions with a view to protecting business assets.
How do you manage Director Disputes?
This really depends on the nature of the dispute. If it is poor performance, then steps should be taken to manage that. If that does not improve then dismissal could be considered. Note however that even if dismissed a director can still remain a director and/ or shareholder unless there is a board resolution.
Much depends on whether there is a directors Service Agreement (contract of employment) or shareholder agreement. If such agreements exist, they usually provide that if dismissed, they must also resign. Usually disputes end up with a resignation and removal coupled with a non-disclosure agreement (NDA).
Without a Service Agreement recourse must be made to the Articles of Association, protection rights under employment legislation and company law.
Where dishonesty is alleged, usually the director would be suspended on full pay, pending an investigation. This would be followed by a Disciplinary Hearing after which a decision would be made whether to dismiss.
How do you remove a Director?
If the intention is to remove a director, a board resolution is needed. If there is a majority in favour, the director can be removed. Problems may occur where shareholders are in deadlock because a board resolution is required.
If a majority cannot be obtained and attempts are still made to remove, the company risks High Court proceedings which could easily cost in excess of £40,000 for each party.
How can we help with your Director Dispute?
Kumari Hart Solicitors will always seek to deal with a director dispute in a sensitive and practical way in order to resolve issues.
All initial enquiries are completely free of charge, so please do not hesitate to call us on: 02477 981545
We can provide a number of funding solutions including a fixed fee quotation and payment by instalments.