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How to resolve Shareholder and Director disputes

Disputes between shareholders and directors can arise in any company leading to conflict, stress and damage to the business of the company.

If a dispute arises, what are your options to resolve the dispute?

  • Negotiation: In some cases, the disputing parties may be able to resolve the issue through negotiation. This approach involves the parties discussing the dispute and reaching a compromise or agreement that satisfies both parties.
  • Mediation: Mediation is a process where a neutral third party helps the disputing parties to reach a mutually acceptable solution. This approach is a cost-effective and relatively quick way to resolve disputes.
  • Arbitration: Arbitration is another dispute resolution process where a neutral third party, known as an arbitrator, listens to both sides of the dispute and makes a binding decision. This approach is commonly used in complex disputes, such as those involving intellectual property, large organisations, or complex commercial arrangements.
  • Litigation: If negotiation, mediation, or arbitration is not successful, litigation may be necessary. This involves taking the dispute to court, where a judge will make a final decision. Litigation can be costly and time-consuming, so it should only be considered as a last resort.
  • Shareholder Agreements: Shareholder Agreements are a legal document that outlines the rights and responsibilities of each shareholder. This can include dispute resolution procedures, such as mediation or arbitration. By including dispute resolution procedures in the Shareholder Agreement, the parties can avoid costly and time-consuming litigation.

Resolving shareholder and director disputes requires a careful and strategic approach. The parties should consider all options and choose the approach that best suits their specific situation. By taking proactive steps to resolve disputes, companies can maintain a healthy business environment and avoid expensive and protracted legal proceedings.

If you require assistance with a shareholder or director dispute, please contact Lachlan Page Practice Group Leader for our Commercial & Business Team. 

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