Business disputes

Business disputes

Disputes internally within a business can be challenging and even have the potential to destroy a good business if not properly dealt with.

There are a numbers of ways that such disputes might manifest themselves, whether that be a dispute between:

  • Shareholders (minorities and/or majorities) in a Company
  • A dispute between directors (and their shareholders also)
  • A dispute between two or more Partners in a Partnership

Therefore, if there is division amongst shareholders, directors, both shareholder and directors or business partners, it is important to seek expert advice and help early in order to protect the value of your business interests.

If you are experiencing any of the common problems outlined below or any other business issues then the commercial litigation team at Palmers Solicitors are on hand to guide you through.

To find out more about the legal support we can offer, please contact us.

Shareholders

Shareholder deadlock (particularly if accompanied by director deadlock) can paralyse a business.

How shareholder disputes and deadlocks are dealt with can often be resolved and negotiated by careful review and consideration of the Company’s Articles of Association or a written Shareholder’s Agreement, provided that (i) the Articles have properly been considered and drafted at the start of the relationship and (ii) a Shareholder’s Agreement exists.

We often find that the contentious scenarios arise where the Articles are silent as to certain rights or where there is no Shareholder’s Agreement. In these situations and more the Companies Act 2006 is vital in determining your rights and unravelling the deadlock where possible.

At Palmers we can walk you through the terms that apply to your shareholder relationship with a view to resolving matters amicably if possible and to get you back to running your business. Sometimes, however, contentious steps are the only option and in those situations we have experience in dealing with all common scenarios, including:

  • Unfair Prejudice Petitions
  • Petitions for the statutory winding up of a Company
  • Removal of a director(s)/the board
  • Shareholder buy-outs
  • Company buy-backs
  • Derivative Actions

Directors

Director deadlock (particularly if accompanied by shareholder deadlock) can paralyse a business. After all, it is at board level that a business is truly run and if the board to your Company is not properly functioning then the business cannot properly function and is at risk of failure.

At Palmers we try to seek practical and negotiated resolutions to board issues, however, we have experience in dealing with a variety of sometimes necessary steps including:

  • Removal of director(s)
  • Appointment of director(s)
  • Breach of statutory director duties
  • Breach of fiduciary director duties

Partnerships

It is the responsibility of Partners to define how a Partnership is run, which is often done through the use of a properly drafted Partnership Agreement governing the Partners relationship, both with each other and with third parties.

However, where that is not done and no Partnership Agreement exists it often comes down to the Partnership Act 1890. Whilst the Partnership Act 1890 is without doubt useful law and assists in implying sensible terms within a partnership relationship where there are no express terms, each Partnership is often distinct and personal and the terms implied by the law cannot fit every situation.

Inevitably therefore most partnership disputes arise because there is either no Partnership Agreement or the one that you have is not properly effective.

At Palmers we specialise in all areas of partnership disputes, including those that most commonly arise being:

  • What happens when one Partner wants to leave a Partnership but the other(s) do not? How much should you pay for their share? Can they take clients with them?
  • What happens when one Partner is not putting in the effort/not doing his or her job properly? Can you get rid of him or her? Can you reduce his or her profit share?
  • Who is responsible for the liabilities of the Partnership? Who can bind who and how?