I think I’ve been stitched up by my ‘trusted’ fellow shareholders
Could your fellow shareholders, directors or your business partners really be so disingenuous?
You know the feeling when something just doesn’t feel right. That feeling might arise from a bank entry you don’t understand and which can’t seemingly be explained. It might result from your questions not being answered. Or it come about as you become increasingly aware of conversations going on and decisions being made behind your back.
For any director of a company this feeling can feel like a hard pill to swallow. It can be both hurtful and demoralising to think that your working relationship isn’t as strong as it once was.
Of course, it’s not only your relationship with your fellow shareholders, directors or business partners that may suffer; your business could be impacted significantly too!
The good news is a route to resolution can generally be found even in the most strained of circumstances. The success of this resolution will largely come down to what steps you take in the wake of the fallout and who you engage to assist with it.
Dealing with a fallout
When you’ve had someone cheat on you behind your back – whether that’s in work or in a personal relationship – there are generally two ways to move forward.
The first is to get emotional and upset and try to make the wrongdoer “pay” or to try to get “even”.
The other is to think logically and practically, strip away the emotion, and, take a far more proactive approach. This will almost always offer a more favourable conclusion in the long term.
Do remember it is very easy to let emotion take over and lead your actions. It’s understandable; particularly when someone close to you has breached your trust. However, it’s important that this doesn’t cloud your judgement or impact negatively on your chances of resolving the dispute on the best terms available.
What outcome are you looking for?
This is the key question to ask yourself when you are in the midst of a conflict with a fellow shareholder. Getting “even” may be the tempting option but is it really the goal here? Take time to sit down and reflect on what outcome would be best for you in this situation.
Do you want to buy out your fellow shareholder from the business and have them cease to have any further involvement in the business? Alternatively, do you yourself want to walk away from the business in exchange for a fair value for your interest in it?
Having a clear goal as to how you want to resolve matters will help define your route to resolution and the best steps to take to achieve it.
A specialist and experienced barrister should be able advise you on your options, talk you through the various dispute resolution processes available and advise on what, realistically, is achievable.
The path to resolution
- Having the right paperwork in place: If you already have a shareholders’ agreement in place this will likely include provisions that can be used to help reach resolution. For example, a shareholders’ agreement might contain terms that permit you to force a shareholder to sell their shares. Again, care needs to be taken in enforcing such provisions and a barrister with specialist experience in this area can help you iron this detail out. (incidentally, if you don’t have a suitable shareholders’ agreement then it is certainly worth putting one in place before any conflict or dispute arises.) Even if you have no shareholders’ agreement in place you will have articles of association or a partnership agreement the terms of which might very well assist in finding the appropriate way forward to resolution.
- Access to specialist legal advice: Getting sensible specialist advice from an experienced barrister early on about your legal rights is probably the best way to ensure that disputes don’t escalate and that the path to resolution is as straightforward and pain-free as it can be.
- Negotiation and mediation: It is generally preferable to resolve disputes by using negotiation strategies or through engaging in mediation where possible but you should avoid getting bogged down in interminable and costly correspondence that doesn’t achieve much but serve to entrench positions. Again, your barrister can assist with this; trying always to ensure that sensible compromises are achieved while keeping relationships as intact and as amicable as possible.
- Litigation: Of course, if things can’t be resolved via mediation, litigation through the courts may have to be considered as a final resort. Rest assured that if this is the route you end up taking, the right barrister will provide support throughout the process and keep costs transparent so that you enter into proceedings well prepared and confident.
For the majority, this will be the first time you might have faced a shareholder or partnership dispute within your business. If this is the case, you will no doubt have many questions and concerns as to what to expect. Please do get in touch if you would like some more information or would like to discuss your own specific circumstance. An initial 30 minute consultation is free and I’d be very happy to advise you as to the best steps to take.
