Problem: Our client, a 50/50 shareholder and director in a company, was involved in a serious dispute with their co-shareholder. The disagreements were significant, including misappropriation of company funds, exclusion from access to company accounts, and other actions that unfairly prejudiced our client’s position. The situation required strategic legal action to protect our client’s interests and resolve the conflict.
Outcome: In just over 3 months, our expert commercial litigation team successfully negotiated a settlement. Our client received £85,000, avoided restrictive covenants, and retained a key client, enabling them to establish a new venture independently of the other shareholder. Importantly, this settlement was achieved while preparing for court action, as we were fully confident that our client would prevail if the case proceeded to litigation.
How long did it take? Just over 3 months.
Our client, an equal shareholder in a company, faced a contentious dispute with their co-shareholder. The breakdown in their relationship led to actions by the other shareholder that severely prejudiced our client’s rights and interests. These included the diversion of company funds, exclusion from financial information, and misappropriation of company resources.
Key Issues in the Dispute:
- Misappropriation of Funds: The opposing shareholder was accused of diverting significant company funds to other entities and setting up a competing business.
- Exclusion from Company Affairs: Our client was unfairly excluded from accessing company accounts, financial information, and key decision-making processes, which is a breach of their rights as a shareholder and director.
- Unfair Prejudice: We were fully prepared to file an unfair prejudice petition under Section 994 of the Companies Act 2006, confident in the strength of our client’s case. This petition highlighted the various ways in which the other shareholder’s conduct was prejudicial to our client’s interests.
- Threat of Legal Action: Our legal team prepared for court action, including seeking injunctive relief and a just and equitable winding-up petition. We were ready to aggressively pursue these claims in court, certain that our client would succeed.
Through strategic legal manoeuvring and by making clear our readiness to take the matter to court, we highlighted the severe consequences the other shareholder could face if litigation ensued. This included potential director disqualification, significant financial liability, and a court order compelling the dissolution of the company.
Recognising the strength of our client’s position and the likelihood of a costly and unfavourable court outcome, the opposing shareholder agreed to a settlement. Our client secured a favourable outcome, receiving £85,000 and the ability to retain a key client without restrictive covenants, allowing them to establish a new business independently.
Our commercial litigation and dispute resolution team have extensive experience in handling complex shareholder disputes. We are skilled in using legal strategies such as unfair prejudice petitions and injunctive relief to achieve favourable settlements for our clients while being fully prepared to succeed in court if necessary.
Need Help with a Shareholder Dispute?
If you’re involved in a shareholder dispute or facing issues within your company, don’t hesitate to contact us. We offer a Free Consultation at 0207 459 4037 on a no-obligation basis, or you can complete our online booking form today. Let us help you protect your rights and resolve your business conflicts effectively.
