Legal Strategies that Protect Business Interests

The Lawyers of PMR Law

Resolving shareholder disputes

On Behalf of | May 10, 2022 | Business Law |

Shareholders have rights and responsibilities, which can vary based on the agreements and the type of shareholders they are. They can also run into some complex disputes when it comes to filling these roles and carrying out their duties.

Common sources of shareholder disputes

Shareholders may get involved in conflicts and arguments with each other or with a company owner. Some of the more common types of shareholder disputes stem from:

  • Alleged breaches of a shareholder agreement
  • Conflicts of interest
  • Lack of respect for minority shareholders
  • Gaps in compensation and contributions
  • Disagreements about corporate management decisions
  • Improper transfers
  • Fraud or withholding financial information

These conflicts can disrupt business operations and threaten relationships. And there can be a tremendous financial toll to consider. As such, confronting these issues right away and seeking the most appropriate form of dispute resolution will be crucial.

Approaches to resolving conflicts

Resolving shareholder disputes can be tricky and stressful, especially considering how much can be at stake. However, there will typically be guidance in a shareholder agreement, so it is generally wise to start by examining this document.

For example, a shareholder agreement may have provisions that direct parties to:

  • Sell shares
  • Clear decisions with minority shareholders
  • Limit share transfers
  • Participate in mediation or negotiation
  • Resolve disputes through binding arbitration
  • Vote on an issue

These measures can prevent or resolve conflicts before they escalate.

However, there are some instances when a shareholder dispute might wind up in court. Such could be the case in conflicts involving oppression – when one group of shareholders abuses their power over another group, which are often minority shareholders.

In these cases, the courts can order various types of relief to correct or modify problematic situations.

Getting help throughout this process

Matters involving shareholders can be highly nuanced and complicated. And resolving disputes can demand a great deal of negotiation and investigation. Often, legal representation is crucial for parties involved in an argument. 

Whether parties navigate mediation, arbitration or litigation processes to settle these issues, legal and financial guidance can help shareholders pursue a fair outcome.

Contact the Firm

Award-Winning Service

PMR Law have been named the winner of the Business Law Firm of the Year 2017 Canada by CV Magazine and the Global 100 Excellence Award as Firm of the Year (Litigation Counsel) Canada. These awards are much appreciated by the firm. In everything we do, we strive to provide the best service for our clients.