Disputes within the corporate world are an undesirable – and virtually inevitable – consequence of doing business and are especially disagreeable if they take place within an organisation’s very own ranks.

Moreover, disputes between parties situated at an organisation’s top table – between shareholders and the board, for instance – are certainly common occurrences within the outwardly polished corporate world and can arise for a variety of reasons, often related to remuneration, misappropriation or representation issues.

Should it come to pass that shareholders find themselves embroiled in a dispute with the boardroom, it is important that all parties have a full understanding of their legal rights, as well as an appreciation of the resolution options available. This may well include a determination of the consequences of allowing shareholder/board relations to deteriorate any further.

A recent, compelling example of how a dispute between shareholders and the board can play out is the reaction of BP shareholders to the news that CEO Bob Dudley was in line to receive a 20 percent year-on-year pay rise that would take his remuneration package to $20m (£14m).

The response of BP shareholders was to revolt and vote against the proposed increase in Mr Dudley’s pay. A number of investors described the motion as “unreasonable and insensitive” given the oil giant’s reported annual loss of $6.5bn, not to mention the thousands of job cuts engendered by the record loss.

In this instance the dispute passed swiftly, with the not so binding shareholder vote ultimately deemed by BP senior executives to be merely ‘advisory’, though this is an issue that is likely to cause the executives further discomfort in future.

Jul-Sep 2016 issue

Fraser Tennant