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How can I navigate shareholder disputes?

| Aug 23, 2019 | Business Law

Having shareholders in your company is a great way of getting an adequate amount of funding. It will also help you bring in people with different areas of expertise that will help your business thrive.

However, the more shareholders that you have in your company, the higher the likelihood of a dispute occurring. Shareholder disputes can be very damaging and costly to a company, and this is why it is so crucial that you take appropriate action to resolve the dispute. The following are some ways that you can do this effectively.

Check the agreements that are in place

Before you start attempting to resolve the situation or to argue your case, you should make sure that you have a good understanding of each person’s rights. Therefore, you should start by reading through all the agreements in place. Ideally, you will already have an agreed procedure on dispute resolution.

Establish the true objective of the claimant shareholder

It’s vital that you gain a genuine understanding of the nature of the dispute. One shareholder may be fighting their corner because they truly believe that taking a certain action would have a better outcome for the company. However, they may have hidden or more strategic objectives that you need to work to uncover.

Consider negotiation

In trying to avoid litigation and the associated costs, you may want to consider negotiation as a potential form of dispute resolution. In many cases, this is a great way to avoid a more complex dispute.

If you are dealing with a shareholder dispute in your company, time is of the essence. Make sure that you take swift action to remedy the situation effectively.