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Director and Shareholder Disputes

Companies are separate legal entities from its directors and shareholders. Companies can sue or be sued by their directors and/or shareholders. In some cases companies are the only possible claimants in relation to directors’ or shareholders’ wrongdoing.

The key document which sets out the balance of power within a company is its Articles of Association. These act as a binding contract between the company and its shareholders. Subject to any overriding company law the Articles determine who within a company exercises which powers on its behalf.

Directors generally have day to day control of the company under the Articles, making decisions such as whether or not to enter into any contract; raise finance or take any other steps in relation to the management of the company.

However shareholders have the ultimate power as they can, by majority vote, dismiss a director and appoint a new director to the board.

Most shareholders’ disputes arise over decision-making issues between majority and minority shareholders. Minority shareholders can feel excluded by the majority shareholders but the law protects them and enables them to make claims for being ‘unfairly prejudiced’ by majority shareholders. Other disputes arise when there is a breach of a shareholders’ agreement by certain shareholders requiring redress of the wrong committed on behalf of the company.

Our team offers comprehensive in-depth advice to individual directors or shareholders or collectively to companies, in all matters of boardroom and shareholders’ disputes. We offer a comprehensive service from arranging negotiations to advising and representing you through court proceedings.

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