The Consequences of Shareholder Disputes
When you have a business with shareholders one thing you have to watch out for is a dispute between the shareholders and directors. This can arise if the shareholders don’t get much in the way of return for their investment and they blame the director for mismanagement. It is essential to have commercial lawyers, who know all about your business to try and reduce the damage as much as possible and get things back on track.
The consequences of not clearing the problem up are serious and can even be disastrous.
They can include:-
- Loss of reputation and potentially, lost custom and income for the business
- A great deal of emotional trauma for those involved
- Loss of control for the director/s
- Possible legal action against the company if it is found the director/s are doing the wrong thing
- Litigation that can drag on for many months and cost more than you can pay
- Dissolution of the business
Some disputes are simple and can easily be solved by firing the director if they have done the wrong thing. But others can be a great deal more complex and include many different factors that the directors cannot be held responsible for, such as a market downturn.