OPTIONS FOR REDRESS: RESOLVING SHAREHOLDER DISPUTES
The major global events of the past few years – the coronavirus (COVID-19) pandemic and its fallout, the war in Ukraine and the growing number of struggling economies, among others – have done much to disrupt the status quo, with the breakdown in business relationships one of the many casualties of the worldwide disruption.
One aspect of business that has been a casualty of recent turmoil is the relationship between a company and its shareholders. This association involves top-level business agreements where there is always the potential for partnership disputes.
A common enough occurrence across the business world, a dispute between shareholders is essentially conflict between individuals who have a vested interest in the company’s success, such as majority and minority shareholders and directors. A dispute of this nature can also negatively impact on a company’s management, reputation and performance, and, in some circumstances, result in its demise.
“Nobody enters a transaction focused on the worst possible outcome,” notes David Bridge, a partner at Cameron McKenna Nabarro Olswang LLP. “Disputes lawyers of course know that all good things must come to an end and that is when disagreements between shareholders and the company, or between shareholders themselves, can be time-consuming and costly, not to mention destabilising for the business as a whole.”
While always prevalent, the number of shareholder disputes has escalated in recent years. Such conflicts have been fermented by a volatile and uncertain business environment, then propagated across a company’s shareholder base.
Jan-Mar 2024 issue
Fraser Tenannt