"The Litigation Maze"
PART OF HOWES PERCIVAL'S FREE LEGAL ADVICE SERIES
4. SHAREHOLDER DISPUTE
You own a company with an old friend and another (who is a "silent partner"), and you and your friend are both directors. Business has been going well but lately your friend has excluded you from management meetings and has dismissed some key employees without consulting you first. What do you do?
Nothing, but things get worse and you can no longer be in the same room as each other.
What do you do next?
Call a meeting and talk through your concerns. Does
this improve things?
No the friend's behaviour is getting worse and now they have called a
shareholder meeting to try to remove me as a director.
Yes they hadn't realised that their behaviour was a problem but things
have quickly settled down.
Does your friend hold more than 50% of the shares?
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Do you hold 50% or less shares?
Yes No I am a majority shareholder
See a solicitor if your interests as a minority shareholder have been prejudiced, you may be entitled to bring a claim against your old friend.
See a solicitor you may be able to call a shareholders' meeting to remove your old friend as a director.
No I hold the majority
OR me and the other shareholder together hold over 50% and the other shareholder is on
No but they and the other shareholder together own more than 50% of the shares. The other shareholder is usually
very quiet, but now seems to be on their
With more than 50% of the shares you could block your own removal
as a director or remove your old friend. See your solicitor to find out
how to do this.
Yes See a solicitor as soon as possible. With a majority shareholding or disregard for the law against you, you could be removed as a director and/or other changes to the running of the company could be made to your detriment.
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