Shareholder disputes

Practicalities

In practice, the first thing to do in most shareholder disputes is to secure the Company assets and protect them from the other shareholders.

This may mean double checking (or even changing) the Company bank mandate.

Checks should also be carried out to make sure that Company monies haven't been paid out to lawyers to fund the battle ahead.

Access to fundamental documents or information may also be important.

It is not uncommon for documents and files to mysteriously 'go missing' and these may be the very documents needed to prove the case of one or other shareholder.

Securing vital documentation or evidence may need to be considered in conjunction with regulating arrangements for access to Company premises.

It may be difficult to take one or more of the above steps without holding a controlling majority shareholding.

The real power to do many of these things lies with those who are able to control the Board of Directors (see 'Company Structure') and securing control of the Board will normally be of vital practical importance.

Typically, at the outset of many shareholder disputes, there will be a short period of confusion about which exact rules govern the particular Company in question and there may be factual arguments about what has actually gone on in the Company's past.

Many of the answers to these matters will be found in the Company's Articles of Association and the statutory books and records of the Company, which should always be checked immediately.

[see the 'Rights of a Shareholder' section for details of what statutory books and records should be kept by every company]