Shareholder dispute

Shareholder dispute in corporate law is a common conflict that can arise within a company. Shareholders often have different interests and goals, which can lead to conflicts over a company's strategy, governance and decision-making. In this article, we discuss the main aspects of the shareholder dispute and how it can be resolved. 

What causes a dispute between shareholders

A shareholder dispute can arise when shareholders disagree on the direction in which a company should develop. For example, when some shareholders are more focused on short-term profits, while other shareholders are more interested in longer-term growth. This can cause conflicts over investment decisions, dividend policy, mergers and acquisitions, and other strategic decisions. In some cases, a shareholder dispute can lead to power struggles within the company, with different shareholders trying to restrict each other in their decision-making. This can be detrimental to the continuity of the company and the value of its shares.

Shareholder dispute resolution: amicable or not? 

The shareholder dispute can be resolved in different ways, depending on the specific circumstances. In some cases, a solution can be found through negotiations between the parties involved. In this process, a mediator may be brought in to resolve the conflict. This may be a mediator or a lawyer. In such cases it can be referred to as an amicable solution. 

In other cases, further legal assistance is needed to resolve the shareholder dispute. This may ultimately result in one of the shareholders having to offer its shares to the others.

Shareholder dispute bad for the company

In this regard, it is good to realize that the shareholder dispute is initially limited to the parties involved. Nevertheless, quick and effective action must be taken when a conflict arises in order to protect the continuity of the company and the value of the shares.

Preventing a shareholder dispute

To avoid conflicts between shareholders, it is advisable to make clear agreements in the shareholders' agreement and the company's articles of association. The shareholders' agreement often lays down more detailed arrangements than the articles of association. Sometimes the shareholders' agreement even deviates from the articles of association. For example, the shareholders' agreement can include agreements on decision-making, investments and the company's policy. It is therefore an extremely important document, which can almost be compared to a prenuptial agreement. Therefore, get proper advice from a corporate lawyer if you want to enter into or modify a shareholders' agreement. 

Corporate lawyer in shareholder dispute

The corporate law attorney at Lexys Law can tell you more about preventing and resolving a shareholder dispute.